Rob Levine
March 11, 2001

How The Conservative Philanthropies, C. Boyden Gray, and the Law and Economics Movement Nearly Sank the Federal Regulatory State

(Using tax-exempt funds)

"E.P.A.'s Authority on Air Rules Wins Supreme Court's Backing" announced the headline in the New York Times on February 28, 2001, a day after the court unanimously overturned a 1999 appeals court ruling that had thrown out Environmental Protection Agency air quality rules on the grounds that Congress had unconstitutionally delegated regulatory authority to its environment agency. Although very few people had heard of the case of American Trucking, it had nonetheless been a legal tsunami waiting to crash against federal agencies regulating everything from worker safety, to broadcasting, to food and drug safety.

The Supreme Court gained the right to hear the American Trucking case when, in May 1999, a three-judge panel of the US Court of Appeals for the District of Columbia (the same court that is currently hearing the Microsoft breakup order appeal) ruled 2-1 that Congress had made "...an unconstitutional delegation of legislative power..." in allowing the EPA to set environmental standards.

This was a shocking resuscitation of the legal concept of "nondelegation" -- that is, that Congress cannot delegate to some other body the power to be Congress. Nearly all serious legal scholars had considered the nondelegation clause settled. No, Congress cannot give the power to be Congress to others; but it can give general orders to its own regulatory agencies to achieve goals within broad aims. The act that created the Federal Communications Commission, for example, merely charges the agency with ensuring that broadcasting serves the public interest.

Anyone -- excepting the three judge panel that overturned the EPA rules in the first place, it would seem - could see that there is no way it would be humanly possible for members of Congress to actually do the regulating that it has delegated to its agencies.

Given their recent selection of George W. Bush as president in what many saw as a highly partisan and political decision, this was an important case for the Supreme Court. Many of the players in American Trucking were part of the Bush team, including George H.W. Bush's lawyer C. Boyden Gray and Republican Senator Orrin Hatch.

Many questions arise from the disposition of this case. First, it is hopeful to note that the Supreme Court is capable of acting against the interests of its partisan and political friends, even if it is in a case where affirming the appellate court would have been an outrageous act. But who can call what the court did in stopping the vote counting in Florida anything but an outrageous act to serve its partisan and political allies? What was to stop the court from doing so again? Apparently the Justices may have at least temporarily slaked their thirst for such boldness (a conclusion, I might add, contradicted by a recent Clarence Thomas speech to the "conservative prom" at the American Enterprise Institute).

But was this really a big victory for the EPA? Perhaps a bigger question is how did this case make it to the Supreme Court in the first place? Others are: How did the appeals court come to make such a ridiculous decision? Who are the judges who made such a decision? Where did they get the idea to use such a discredited legal notion as "nondelegation" as the basis for overturning much of the federal government's regulatory authority? A close look at the people, organizations and funding involved in American Trucking reveals a troubling confluence of industry, tax-exempt charities, tax-exempt philanthropies, congressmen and judges.

Surprisingly, the impetus, money and expertise for much of the case against the EPA came from a group of tightly interconnected tax-exempt quasi-Republican organizations. Two of them - the Federalist Society and Citizens for a Sound Economy - played key roles. Following the money further backwards shows that those two organizations and dozens of others are on a permanent campaign against government regulation, funded by a handful of conservative philanthropies led by the Lynde and Harry Bradley Foundation of Milwaukee, Wisconsin, the John M. Olin Foundation of New York, NY, and the Smith Richardson Foundation of Westport, CT.

This funding stream from philanthropies to tax-exempt corporate front groups which act in blatantly political ways ensures that despite this temporary legal setback the march toward deregulation will continue unabated. Indeed Clarence Thomas practically invited more such actions in a concurring opinion, where he announced that he would welcome future nondelegation challenges.

How exactly does this campaign against regulation work? First, the conservative philanthropies make grants to "study" regulation, its affects and its costs. Since 1987 they have made grants of at least $2.5 million to study regulation. Two grants totalling $61,000 to the New York Law School from Richard Mellon's (he's dropped the "Scaife") Carthage foundation actually funded "RESEARCH ON CONGRESSIONAL DELEGATION OF AUTHORITY." One of the conservative movement's institutions, the Cato Institute even has a regularly published magazine called Regulation.

More importantly, the philanthropies have spent at least $30 million subsidizing law schools and conservative organizations to push their idea of "Law and Economics," a movement within a movement that aims to establish the people-denying, hyper-rational idea of "maximizing wealth" to the goal of all law! (And since the market is so good at this, Law and Economics asserts that the market should decide on the distribution of the wealth as well.)

The campaign against regulation also has many friends on the federal and state benches. To understand this, you must first know that one important tactic in the Law and Economics movement is to get judges, in the name of maximizing wealth, to consider economics, despite what laws actually say, as the most important basis of legal decisions. To this end the conservative philanthropies have spent at least another $4 million to "educate" federal and state judges on the concept by sending them to seminars at posh resorts, where they learn that regulation should be limited, and that the free market should be relied upon to protect the environment.

The Washington Post has reported that a third of the federal bench has been to one of these indoctrination junkets. The same story reported that almost two dozen judges illegally failed to mention the visits on their financial disclosure forms. Now an entire website has been created at TripsForJudges.com to allow the general public to interactively search for judges who may have been compromised by such a trip.

But back to those judges on the US Court of Appeals for the District of Columbia. A close examination of the behavior of the two judges who voted in favor of the polluters, Stephen Williams and Douglas Ginsburg, reveals troubling political and partisan connections that may have played a part in their decision.

Both are very active in the aforementioned Federalist Society, a tax-exempt legal fraternal organization that has received more then $6 million from the conservative philanthropies. The Federalists have played a pivotal role in the weakening and rolling back of legal statutes on civil rights and affirmative action; voting rights; women's rights and abortion rights; workers' rights; prisoners' rights; and the rights of consumers, the handicapped, and the elderly -- yet steadfastly claim to not be political.

Curtis Moore, writing in the Center for Public Integrity's The Public i, reported last September that the Federalist Society is up to its proverbial neck in this case. US Senator Orrin Hatch, a member of the society's board, filed a brief in favor of the plaintiffs. That brief was written by another Federalist board member, C. Boyden Gray, who is simultaneously the head of Citizens For a Sound Economy, another tax-exempt charity that has received $8.8 million from the conservative philanthropies. Moore continued that the brief was written:

"...to defend the corporate interests of a member of the Business Advisory Council of the Federalist Society, Joseph Cannon of Geneva Steel, in a case to be heard by two judges, Ginsburg and Williams, who are active participants in Federalist Society events, that [was] later appealed to the U.S. Supreme Court to be heard by two justices who are active at Federalist Society events, Antonin Scalia and Clarence Thomas, and a third, David Souter, whose nomination was screened by the Federalist Society member who wrote the brief, [Boyden] Gray..."

Gray was also the chief strategist for the industry coalition formed to kill the EPA proposals, the Air Quality Standards Coalition (AQSC) as well as the hired lobbyist for the aforementioned Geneva Steel, an aging mill located just outside Salt Lake City, whose president was the head of the Reagan Administration's EPA air office. Thus Gray wore not one, two, three or even four hats but five:

Lobbyist for Geneva Steel
Chief strategist for the AQSC
Chair of Citizens for a Sound Economy
Friend and confidante of federal judges and members of Congress
Board member of the Federalist Society

According to Moore, "Boyden Gray orchestrated each of those and other entities to produce a textbook symphony of inside-Washington corruption."

In 1997 Gray and CSE launched a radio advertising blitz against the proposed EPA regulations that ran on 80 stations in 20 markets and cost hundreds of thousands of dollars. When the appeals court eventually ruled for Gray and his friends, Citizens for a Sound Economy actually took credit for the decision, posting a document on its website bragging that "Boyden Gray's brief was funded in part by CSE's education affiliate CSE Foundation." The claim actually turns out to be not only bluster but correct, as the arguments presented in Gray's brief, and not those brought by the actual plaintiffs in the case, held sway with the appeals court.

Justice Williams, it turns out, is well-versed in Law and Economics. His rap sheet at TripsForJudges.com shows paid trips to two Federalist Society events (one at Duke and one at Harvard); three paid trips to events sponsored by the Foundation for Research on Economics and the Environment (FREE); one trip to Hilton Head, SC for a Law and Economics seminar, and two trips to the University of Chicago, one of the theoretical homes of the Law and Economics movement.

FREE itself is well sponsored, having received at least $1.5 million from the conservative philanthropies, and the University of Chicago has received at least $26 million. George Mason University, which has received more than $17 million from the conservative philanthropies, paid for two trips for Williams.

Williams' colleague in nondelegation jurisprudence, Douglas H. Ginsburg, has taken even more free trips, logging at least 10 sponsored by FREE, many for stays at luxury ranches near Bozeman, Montana. He's also taken three free trips to Federalist Society events, six free trips sponsored by George Mason University, four sponsored by the University of Chicago, and one by the Atlas Foundation, another tax-exempt organization that has received at least $2 million from the conservative philanthropies.

A July, 2000 report by the Community Rights Counsel, a public interest law firm, was particularly critical of both Ginsburg and Williams for attending a 1998 FREE seminar after they had taken on the American Trucking case. Ginsburg, the report noted, is actually on the FREE board of directors!

And let's be clear about this: FREE is really nothing but an industrial front group, a "greenscam". One only need consider the entry in their "desk reference" book for federal judges on the question of pollution, which offers the blame-the-victim view that the costs of pollution are produced by both the polluter and the afflicted because "your steel mill would do no damage if I (and other people) did not happen to live downwind from it."

Consumers of mainstream news reports of the Supreme Court's decision in American Trucking may have gotten the false impression that, given the bench's unanimous ruling striking down the conservative movement's legal arguments for the polluting industries, all is well for the EPA and the Federal regulatory state. But that would be a mistaken impression. As noted above, Justice Thomas invited further challenges under nondelegation in his concurring opinion.

And buried in news stories on the decision was the justices' ruling that the policy for implementing the EPA new guidelines on soot and ozone -- commonly known as smog -- violated 1990 amendments to the Clean Air Act. Lawyers for the conservative movement have called this a "significant development," and said they will continue pressing this issue and others surrounding the Clean Air Act back -- you guessed it -- in the US Court of Appeals for the District of Columbia -- the same court that started this mad dash in the first place.