Reclaim Democracy!

Key 2024 Supreme Court Cases — environment and democracy: Loper Bright Enterprises v. Raimondo

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Will a majority of Justices overturn a 40-year-old precedent to grab more power for itself and for corporations?

March 2024

On the surface Loper Bright is a dispute about fishing corporations challenging the power of the National Marine Fisheries Service to require them to pay the cost of observers who monitor companies’ compliance with federal fishery rules. But this seemingly narrow legal question actually could yield widely destructive consequences because the justices have opted to re-examine a 40-year-old precedent the court established in Chevron Inc. v. Natural Resources Defense Council. 

That precedent, widely known as the Chevron Doctrine, says state courts should defer to federal agencies’ interpretation of a law when the language is ambiguous or leaves discretion regarding implementation.

Chevron effectively says the civil servants with expertise in their field and who are accountable to an elected president should decide how to implement Congress’ mandates, rather than judges — a principle clearly rejected by the most regressive justices. Reversing this precedent would do enormous harm, stripping many federal agencies charged with protecting civil rights, consumers, and public health and safety; limiting pollution and environmental harm; and much more. 

Stripping the Environmental Protection Agency of its authority to limit carbon emissions is one obvious industry target. 

Dozens of corporate and far-right advocacy groups are pushing the court to overturn Chevron and anoint federal courts as the arbiters of which federal regulations are proper. Such a ruling would invite floods of lawsuits challenging rules that limit or regulate corporate activities. Workplace safety rules, product safety regulations, and limiting emissions to abate the climate crisis are among the obvious targets.

Reversing Chevron also would undermine other core Unitarian Universalist values by enabling state politicians to challenge crucial federal civil rights and voting protections.

Congress is ill-equipped to manage the day-to-day administration of legislation it passes and necessarily must empower federal agencies to turn its broad directives into specific actions based on good-faith interpretations. Those actions remain subject to judicial oversight if any agency truly exceeds its authority. Accordingly, SCOTUS should uphold theChevron precedent and sustain the ability of civil servants to do their jobs effectively.

SCOTUS however, appears likely to at least weaken, if not overturn, the Chevron Principle, based on reports from oral argument.

Origin and Status: The case came on a writ of certiorari to the U.S. Court of Appeals for the District of Columbia Circuit. In October, the court also agreed to hear a second challenge to the Chevron Doctrine, Relentless v. Department of Commerce, which will be argued simultaneously with Loper v. Raimondo. 

Related: Edison Electric Institute v. Federal Energy Regulatory Commission (FERC):  Other corporations also are pushing the Court to overrule Chevron and grant them more power. The Edison Electric Institute and the utility NorthWestern Energy seek to have a lower court ruling in favor of the U.S. Federal Energy Regulatory Commission overturned. They object to approval of a FERC finding that a Montana solar and battery storage facility qualifies for incentives that encourage small renewable energy producers to upload power to the grid. No action has been taken by the Court as of April 2024.

NorthWestern Energy Must Be Made Accountable to Ratepayers

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By Larry Bean

Imagine a world where the law forces customers to buy from a single corporation. Imagine that same law guarantees profits for using expensive, outdated, and risky business practices. Worse yet, imagine this corporation chooses to emit dangerous toxic pollutants while hiding from public scrutiny. You need not imagine this scenario. It’s how NorthWestern Energy conducts business in Montana, and we customers deserve better.

The monopoly corporation is building an expensive, polluting methane-fired power plant along the Yellowstone River in Laurel and has managed to evade any meaningful public input thus far.  That is until April6, when District Judge Michael Moses ordered the construction of the plant be halted. Why? The health and environmental impacts that will surely come if this facility is allowed to operate were not properly considered. The Montana Department of Environmental Quality issued a permit based only on the inadequate data provided by NorthWestern.  

Laurel residents (and Billings residents downwind) will experience carcinogenic air pollution. State agencies tasked to protect our health and air quality have documented that the plant will emit toxic Hazardous Air Pollutants (HAPs) including formaldehyde, propylene, and benzene. 

Folks living within a few miles of the plant will contend with loud engine noise and overbearing industrial lighting all hours of the day and night, with this massive plant dominating what used to be an agricultural area. In fact, the plant’s site is still zoned for agricultural use, but that hasn’t stopped NorthWestern from continuing industrial construction without proper zoning permits.

Not only does the corporation want to keep us in the dark about the environmental impact its plant will have on the Yellowstone Valley, NorthWestern does not want us to know the full amount it will take out of the ratepayers’ pockets. 

NorthWestern already raised our rates last year, and it’s trying to get even more increases approved right now.  Bad business decisions like this expensive plant are part of the reasoning for rate increases.

Thus far, NorthWestern has barreled forward without meaningful public hearings or comment periods. What is the corporation hiding? And why is it building such an expensive, polluting plant when other responsible energy companies in our region are investing in reliable energy sources that are cleaner, safer, and more affordable? It’s because of a rigged system that the monopoly corporation is abusing. 

The technical term is “Return on Equity” or ROE. The state guarantees NorthWestern an 11 percent profit for building, operating, and maintaining power plants, creating incentives contrary to the interest of its captive customers.

Just think, the cost of the plant (estimated at a third of a billion dollars), maintenance and operation of very complicated internal combustion engines, and an increasingly expensive fuel for which this plant will compete and help to make prices even higher, all paid for by you and me, plus a guaranteed 11 percent profit.  

NorthWestern has brazenly abused its monopoly position, and this expensive methane-fired plant that will pollute the entire Yellowstone River valley is just the latest chapter. 

Because NorthWestern hasn’t given the community or any of its customers an opportunity to provide input, it’s important for us to be proactive in letting the utility hear directly from us. You can add your name to this letter to NorthWestern Energy executives and its board of directors, demanding the corporation give residents and customers a say in decisions about this plant.

Larry Bean is a Billings-based photographer, retired landscape architect, and a member of
Northern Plains Resource Council, a conservation and family agriculture organization.

Book Review: Owning Our Future

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Marjorie Kelly, Being Amazing
Author Marjorie Kelly

Background — The Divine Right of Capital

The biggest problems often seem less like problems and more like unavoidable features of reality – their permanence and ubiquity make them sort of blend into the background. For example, Europeans once took for granted that Kings ruled by Divine Right. It was such a longstanding tradition, few people questioned it.

Marjorie Kelly, founder of Business Ethics magazine and a fellow at the Tellus Institute, has argued for more than a decade that we face another problem of this kind: ownership of corporations – specifically, the cultural norms and laws determining who owns what and what responsibilities and privileges come with that ownership.

In her 2003 book, The Divine Right of Capital, Kelly argued that modern ownership structures are expressions of old feudal ideas about the rights and privileges of ownership. She argues these old ideas are not only long-outmoded but also directly contradict some of our most central cultural values.

Consider the most basic calculation in corporate accounting: profit. Profit equals revenue minus costs. Thanks both to longstanding corporate cultural norms and court decisions like the Supreme Court’s Dodge v. Ford Motor Company, corporations feel obligated to maximize profit for their shareholders, which means maximizing revenue and minimizing costs. It sounds benign until we consider that costs include the salaries of every person doing the actual work of the company. Meanwhile, most shareholders are “absentee owners” who don’t interact with the company except to collect dividends (and raise hackles when they believe a company is too generous with workers).

The example above illustrates that “profit” isn’t just a value-neutral accounting tool. It expresses a judgement about who should receive the fruits of labor.

So companies generally shift as much of the reward of work from workers (top executives a notable exception) and shareholders as possible. What have shareholders done for this privilege? They’ve taken a risk, by handing over money without knowing if they’ll get it back.

The net effect is we’ve systemically promoted gambling at the expense of work.

I read The Divine Right of Capital months ago and had that rare and precious experience of having my brain spun around inside my skull. Despite initial skepticism, Kelly won me over.

Owning Our Future

If the Divine Right of Capital has a shortcoming, it’s that it provided diagnosis only; no cure was offered.

Nonetheless, a decade later, Kelly wrote Owning Our Future, and while it doesn’t provide anything like a comprehensive corrective (Kelly admits this in the book’s prologue) it’s an exploration of possible ways forward and a great conversation starter.

In recent years, an alternative ownership culture has blossomed around the edges of mainstream capitalism. We see it in the proliferation of coops, social businesses of various kinds, and employee-owned businesses.

The recent upward trend in job postings containing the phrase "social business" reflects the growing popularity of such enterprises.
The recent upward trend in job postings containing the phrase “social business” reflects the growing popularity of such enterprises.

Kelly argues these new models provide clues regarding how ownership structures might evolve for the healthier. Owning Our Future is a kind of survey of the different ownership structures emerging from this movement, including discussions of their strengths and weaknesses, and speculation about their potential impact on our world

To convey the fundamental difference between mainstream ownership models and the alternatives she discusses, Kelly draws a distinction between What she calls “Extractive” ownership models, and “Generative” models.

The goal of extractive models are to “maximize financial gain and minimize financial risks.” Kelly argues there are several problems with the extractive model. As just one example, if a company is obligated to maximize profit, it’s incentivized to leave some things off of balance sheets and contracts.

For example, let’s say a new coal plant raises the incidence of lung cancer in nearby residents. But the contracts to build the plant don’t acknowledge the existence of such costs, to say nothing of specifying who is to bear them, and the residents themselves aren’t acknowledged as stakeholders in the transaction.

As a result, residents and the local health system bear a brutal cost resulting from a transaction in which they had no say. Current corporate structures provide no adequate institutional mechanisms for sorting out the resulting messes, or better, preventing them in the first place. To the extent they get sorted out at all, they tend to involve dogfights in which burned citizens go to war with the companies involved. It’s antagonistic, trust-destroying, and often fails to solve anything.

This happens not because company managers are evil, but because our cultural and legal institutions tell those of us who work in corporations that our obligation is to the absentee owners (shareholders), even if it conflicts with our own interests or those of others.

Generative Models, on the other hand, take as their mission some notion of service to community. This is an old, time-honored idea, as Kelly acknowledges: “It’s what the butcher, the baker and the candlestick maker have always done – serve the community as a way to make a living.” In these models, profit is a part of the mission but only as a means to the more central end of community service. Interestingly, experts from various UK betting sites have noted that this approach can also be seen in businesses aiming to create a more sustainable and ethical betting environment, where user satisfaction and community well-being are prioritized alongside profit.

Although the idea is old, Kelly argues it can be and is being implemented not just by the one-employee shop down the street, but by big companies in complex, modern economies. She cites the John Lewis Partnership, owner of one of the largest retail chains in Great Britain. The company is profitable, owned entirely by employees, more democratic than any public U.S. corporation I know of, and its central mission is employee happiness, not profit. It has thrived through decades of disruptive economic change.

Kelly’s conception of generative design goes considerably beyond what I’ve mentioned here – she describes at length five core design principles behind the idea.

Although she argues forcefully for the virtues of generative models, she’s silent on the matter of how we might promote their proliferation. I wish she weren’t, because it’s not clear how her alternatives will displace the entrenched economic forces with sufficient speed and scale.

Another quibble is her discussion of stakeholders. One core principle of generative models is that companies must take account of stakeholder-interest. What she doesn’t much discuss is the exceptional difficulty in defining who is and isn’t a stakeholder. Certain global problems, like climate change, illustrate that, to some extent, every person on Earth is a stakeholder in every company on Earth. How do you take that into account in building a company?

Nonetheless, I loved Owning Our Future. Its umbrella message is that the concept of ownership is not, never has been, and should never be static. Ownership has conferred different rights and responsibilities in different times and places, and our notions of ownership can and will change in the future. Whether they will change for the better or worse depends on how attentive the American electorate is to the issue. Kelly’s book can go a long way toward focusing that attention.

For those interested, I recommend reading Kelly’s earlier book The Divine Right of Capital. It’s aged little and helps bring to light background assumptions most of us aren’t aware we hold. Recognizing those assumptions provides a sound foundation for fully appreciating Owning Our Future.

By Nick Bentley
Organizer, Reclaim Democracy

Our Hidden History of Corporations in the U.S.

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When American colonists declared independence from England in 1776, they also freed themselves from control by English corporations that extracted their wealth and dominated trade. After fighting a revolution to end this exploitation, our country’s founders retained a healthy fear of corporate power and wisely limited corporations exclusively to a business role. Corporations were forbidden from attempting to influence elections, public policy, and other realms of civic society.

Initially, the privilege of incorporation was granted selectively to enable activities that benefited the public, such as construction of roads or canals. Enabling shareholders to profit was seen as a means to that end. The states also imposed conditions (some of which remain on the books, though unused) like these*:

  • Corporate charters (licenses to exist) were granted for a limited time and could be revoked promptly for violating laws.
  • Corporations could engage only in activities necessary to fulfill their chartered purpose.
  • Corporations could not own stock in other corporations nor own any property that was not essential to fulfilling their chartered purpose.
  • Corporations were often terminated if they exceeded their authority or caused public harm.
  • Owners and managers were responsible for criminal acts committed on the job.
  • Corporations could not make any political or charitable contributions nor spend money to influence law-making.

For 100 years after the American Revolution, legislators maintained tight control of the corporate chartering process. Because of widespread public opposition, early legislators granted very few corporate charters, and only after debate. Citizens governed corporations by detailing operating conditions not just in charters but also in state constitutions and state laws. Incorporated businesses were prohibited from taking any action that legislators did not specifically allow.

States also limited corporate charters to a set number of years. Unless a legislature renewed an expiring charter, the corporation was dissolved and its assets were divided among shareholders. Citizen authority clauses limited capitalization, debts, land holdings, and sometimes, even profits. They required a company’s accounting books to be turned over to a legislature upon request. The power of large shareholders was limited by scaled voting, so that large and small investors had equal voting rights. Interlocking directorates were outlawed. Shareholders had the right to remove directors at will.

In Europe, charters protected directors and stockholders from liability for debts and harms caused by their corporations. American legislators explicitly rejected this corporate shield. The penalty for abuse or misuse of the charter was not a plea bargain and a fine, but dissolution of the corporation.

In 1819 the U.S. Supreme Court tried to strip states of this sovereign right by overruling a lower court’s decision that allowed New Hampshire to revoke a charter granted to Dartmouth College by King George III. The Court claimed that since the charter contained no revocation clause, it could not be withdrawn. The Supreme Court’s attack on state sovereignty outraged citizens. Laws were written or re-written and new state constitutional amendments passed to circumvent the (Dartmouth College v Woodward) ruling. Over several decades starting in 1844, nineteen states amended their constitutions to make corporate charters subject to alteration or revocation by their legislatures. As late as 1855, it seemed that the Supreme Court had gotten the peoples’ message when in Dodge v. Woolsey it reaffirmed states’ powers over “artificial bodies.”

But the men running corporations pressed on. Contests over charter were battles to control labor, resources, community rights, and political sovereignty. More and more frequently, corporations were abusing their charters to become conglomerates and trusts. They converted the nation’s resources and treasures into private fortunes, creating factory systems and company towns. Political power began flowing to absentee owners, rather than community-rooted enterprises.

The industrial age forced a nation of farmers to become wage earners, and they became fearful of unemployment–a new fear that corporations quickly learned to exploit. Company towns arose. and blacklists of labor organizers and workers who spoke up for their rights became common. When workers began to organize, industrialists and bankers hired private armies to keep them in line — sometimes by killing key leaders. They bought newspapers to paint businessmen as heroes and shape public opinion. Corporations bought state legislators, then announced legislators were corrupt and said scrutinizing every corporate operation wasted public resources

Government spending during the Civil War brought these corporations fantastic wealth. Corporate executives paid “borers” to infest Congress and state capitals, bribing elected and appointed officials alike. They pried loose an avalanche of government financial largesse. During this time, legislators were persuaded to give corporations limited liability, decreased citizen authority over them, and extended durations of charters.

Attempts were made to keep strong charter laws in place, but with the courts applying legal doctrines that made protection of corporations and corporate property the center of constitutional law, citizen sovereignty was undermined. As corporations grew stronger, government and the courts became easier prey. They freely reinterpreted the U.S. Constitution and transformed common law doctrines.

One of the most severe blows to citizen authority arose out of the 1886 Supreme Court case of Santa Clara County v. Southern Pacific Railroad. Though the court did not make a ruling on the question of “corporate personhood,” thanks to misleading notes of a clerk, the decision subsequently was used as precedent to hold that a corporation was a “natural person.” (This story was detailed in “The Theft of Human Rights,” a chapter in Thom Hartmann’s Unequal Protection.)

From that point on, the 14th Amendment, enacted to protect rights of freed slaves, was used routinely to grant corporations constitutional “personhood.” Justices have since struck down hundreds of local, state and federal laws enacted to protect people from corporate harm based on this illegitimate premise. Armed with these “rights,” corporations increased control over resources, jobs, commerce, politicians, judges, and the law.

A United States Congressional committee concluded in 1941, “The principal instrument of the concentration of economic power and wealth has been the corporate charter with unlimited power….”

Many U.S.-based corporations are now transnational, but the corrupted charter remains the legal basis for their existence. At Reclaim Democracy!, we believe citizens can reassert the convictions of those who struggled successfully to free us from corporate rule in the past. These changes must occur at the most fundamental level — the U.S. Constitution.

We are indebted to our friends at the Program on Corporations, Law and Democracy for their research, some of which was adapted with permission for this article. Sources include:

Visit our Corporate Personhood page for a huge library of articles exploring this topic more deeply.