Hein and Ellen Hettinga are dairy farmers (“producers” under the law at issue) as well as processors and distributors of milk (“handlers”) doing business in Arizona and California. Under a federal pricing and pooling arrangement spawned by milk market regulations put in during the New Deal, handlers must pay into a settlement fund designed to redistribute money to milk “producers.” Two of the Hettingas’ dairy operations fell within exemptions from that arrangement until Congress enacted the Milk Regulatory Equity Act in 2005. The MREA revoked such exemptions for “large producer-handlers,” who were targeted for enjoying a significant competitive sales advantage over non-exempt handlers and for decreasing the values redistributed to producers under the pricing scheme. The Hettingas challenged the constitutionality of the MREA, arguing that it constituted a bill of attainder and violated the Equal Protection and Due Process Clauses. The federal district court dismissed their complaint and the U.S. Court of Appeals for the D.C. Circuit affirmed that dismissal without requiring the government to demonstrate even a plausible justification for the revocation. Effectively, the courts transmogrified “rational basis review”—the last vestige of substantive scrutiny of economic regulations—into a mere pleading formality, obligating courts to dismiss any legal challenges if the government simply asserts that the regulation has a “rational relationship to a legitimate government interest.” Cato has now filed an amicus brief urging the Supreme Court to take this case and establish clear guidance for the application of rational basis review. We argue that, properly applied, rational basis review preserves the judiciary’s role as guarantor of constitutional government and individual rights. Protectionist regulations, which often masquerade as public-interest measures, benefit the powerful at the expense of politically weak and disfavored groups, like the Hettingas. Although substantive review of economic regulations has ebbed following the infamous Footnote Four from the 1938 case of Carolene Products, the Court has never adopted a rule of absolute deference to the political branches. Yet absolute deference is precisely what happens when rational basis review is transformed into a mere pleading burden. The Framers recognized that an independent judiciary was necessary to prevent factions from usurping the political process and “disregarding the rights of another or the good of the whole.” The Court should grant review and disavow such a dangerous abdication of the judiciary’s necessary role.
Featuring Benjamin H. Friedman, Research Fellow in Defense and Homeland Security Studies, Cato Institute; Spencer Ackerman, Senior Writer, WIRED Magazine; and Julian Sanchez, Research Fellow, Cato Institute; moderated by Laura Odato, Director of Government Affairs, Cato Institute.
In the new issue of Cato Policy Report, Cato President and CEO John A. Allison argues that the Federal Reserve is increasing the long-term risk in our financial system through both its monetary and regulatory policies. Also in this issue, James D. Gwartney looks at the incomplete “public choice revolution,” and explains how mainstream economics is leaving both current students and the general public with a misleading, false, and romantic view of government and the operation of the democratic political process.
Featured BookRenowned development economist Deepak Lal draws on 50 years of experience around the globe to describe developing-country realities and rectify misguided notions about economic progress.
More Bang for Your Buck
The Cato Institute tops a new measure of think tank performance in the United States, according to a recent report. Cato bested all other U.S. think tanks in the main category of “Aggregate Profile per Dollar Spent.” “I’m grateful to the Center for Global Development for showing that Cato gives its sponsors something I wish government gave more of to taxpayers: bang for the buck,” said Cato CEO John Allison.