I. Justice Thomas's Other Controversy

f you think back to Clarence Thomas's Supreme Court confirmation hearings in 1991, what most likely comes to mind are the explosive allegations of sexual harassment made by the law professor Anita Hill. Years from now, however, when observers of the court look back on the hearings, they may well focus on a clash that preceded Hill's accusations -- an acrimonious exchange that few remember today.

Early in the hearings, Joseph Biden, the Delaware Democrat who was chairman of the Senate Judiciary Committee, voiced a concern about Thomas's judicial philosophy. In particular, he singled out a speech that Thomas gave in 1987 in which he expressed an affinity for the ideas of legal scholars like Richard A. Epstein. A law professor at the University of Chicago, Epstein was notorious in legal circles for his thesis that many of the laws underpinning the modern welfare state are unconstitutional. Thomas tried to assure Biden that he was interested in ideas like Epstein's only as a matter of ''political theory'' and that he would not actually implement them as a Supreme Court justice. Biden, apparently unpersuaded, picked up a copy of Epstein's 1985 book, ''Takings: Private Property and the Power of Eminent Domain,'' and theatrically waved it in the air. Anyone who embraced the book's extreme thesis, he seemed to be suggesting, was unfit to sit on the court.

At the time, it was impossible to know whether Biden was right to worry. He was surely right, though, that Epstein was promoting a legal philosophy far more radical in its implications than anything entertained by Antonin Scalia, then, as now, the court's most irascible conservative. As Epstein sees it, all individuals have certain inherent rights and liberties, including ''economic'' liberties, like the right to property and, more crucially, the right to part with it only voluntarily. These rights are violated any time an individual is deprived of his property without compensation -- when it is stolen, for example, but also when it is subjected to governmental regulation that reduces its value or when a government fails to provide greater security in exchange for the property it seizes. In Epstein's view, these libertarian freedoms are not only defensible as a matter of political philosophy but are also protected by the United States Constitution. Any government that violates them is, by his lights, repressive. One such government, in Epstein's worldview, is our government. When Epstein gazes across America, he sees a nation in the chains of minimum-wage laws and zoning regulations. His theory calls for the country to be deregulated in a manner not seen since before Franklin D. Roosevelt's New Deal.

After Thomas joined the Supreme Court, Biden's warnings seemed prescient. In 1995, echoes of Epstein's ideas could be clearly heard in one of Thomas's opinions. By a 5-4 majority in United States v. Lopez, the court struck down a federal law banning guns in school zones, arguing that the law fell outside Congress's constitutional power to regulate interstate commerce. Lopez was a judicial landmark: it was the first time since the New Deal that the court had limited the power of the federal government on those grounds. Thomas, who sided with the majority, chose to write a separate opinion in which he suggested that even his conservative colleagues had not gone far enough. The real problem, he wrote, was not just with the law at hand but with the larger decision of the court during the New Deal to abandon the judicial doctrines of the 19th century that established severe limits on the government's power. He assailed his liberal colleagues for characterizing ''the first 150 years of this Court's case law as a 'wrong turn.''' He continued, ''If anything, the 'wrong turn' was the Court's dramatic departure in the 1930's from a century and a half of precedent.''

Thomas did not cite Epstein directly in his opinion. But to anyone familiar with Epstein's writings, the similarities were striking. Indeed, Thomas's argument closely resembled one Epstein had made eight years earlier in ''The Proper Scope of the Commerce Power'' in the Virginia Law Review -- so closely, in fact, that Sanford Levinson, a liberal law professor at the University of Texas, accused Thomas of outright intellectual theft. (''The ordinary standards governing attribution of sources -- the violation of which constitutes plagiarism -- seem not to apply in Justice Thomas's chambers,'' Levinson wrote in the Texas Law Review.) Biden's fear that Epstein's ideas might be written into law had apparently been realized. And the fear would continue to be realized in other courts throughout the 90's as a small but energetic set of lower-court judges, sympathetic to libertarian arguments, tried to strike down aspects of the Clean Water Act, the Endangered Species Act and other laws, challenging powers of the federal government that had come to be widely accepted during the second half of the 20th century.

Chief Justice William Rehnquist is expected to announce his resignation sometime this year, perhaps before the end of the court's current term in June. Rehnquist's retirement would create at least one confirmation hearing for a new justice, and two hearings if President George W. Bush chooses to nominate one of the current justices to be chief justice. At the same time, there is a political battle looming in the Senate over seven federal appellate-court candidates whose nominations were blocked by Senate Democrats during Bush's first term but who were renominated by the president after his re-election. Many liberals and centrists worry, and many conservatives hope, that the doctrine favored by these judicial candidates is originalism, the stated constitutional theory of Scalia. Originalists don't like interpreting the Constitution in light of present-day social developments and are generally skeptical of constitutional rights -- like the right to have an abortion -- that don't appear explicitly in the text of the Constitution. At least in theory, those in the originalist camp champion judicial restraint and states' rights.

But as Thomas's presence on the court suggests, it is perhaps just as likely that the next justice -- or chief justice -- will be sympathetic to the less well-known but increasingly active conservative judicial movement that Epstein represents. It is sometimes known as the Constitution in Exile movement, after a phrase introduced in 1995 by Douglas Ginsburg, a judge on the United States Court of Appeals for the D.C. Circuit. (Ginsburg is probably best known as the Supreme Court nominee, put forward by Ronald Reagan, who withdrew after confessing to having smoked marijuana.) By ''Constitution in Exile,'' Ginsburg meant to identify legal doctrines that established firm limitations on state and federal power before the New Deal. Unlike many originalists, most adherents of the Constitution in Exile movement are not especially concerned about states' rights or judicial deference to legislatures; instead, they encourage judges to strike down laws on behalf of rights that don't appear explicitly in the Constitution. In addition to the scholars who articulate the movement's ideals and the judges who sympathize with them, the Constitution in Exile is defended by a litigation arm, consisting of dozens of self-styled ''freedom-based'' public-interest law firms that bring cases in state and federal courts, including the Supreme Court.

Critics of the movement note, with some anxiety, that it has no shortage of targets. Cass Sunstein, a law professor at the University of Chicago (and a longtime colleague of Epstein's), will soon publish a book on the Constitution in Exile movement called ''Fundamentally Wrong.'' As Sunstein, who describes himself as a moderate, recently explained to me, success, as the movement defines it, would mean that ''many decisions of the Federal Communications Commission, the Environmental Protection Agency, the Occupational Safety and Health Administration and possibly the National Labor Relations Board would be unconstitutional. It would mean that the Social Security Act would not only be under political but also constitutional stress. Many of the Constitution in Exile people think there can't be independent regulatory commissions, so the Security and Exchange Commission and maybe even the Federal Reserve would be in trouble. Some applications of the Endangered Species Act and Clean Water Act would be struck down as beyond Congress's commerce power.'' In what Sunstein described as the ''extreme nightmare scenario,'' the right of individuals to freedom of contract would be so vigorously interpreted that minimum-wage and maximum-hour laws would also be jeopardized.

Any movement with such ambitious goals must be patient and take the long view about its prospects for success. Michael Greve, an active defender of the Constitution in Exile at Washington's conservative American Enterprise Institute, argues that to achieve its goals, the movement ultimately needs not just one or two but four more Supreme Court justices sympathetic to its cause, as well as a larger transformation in the overall political and legal culture. ''I think what is really needed here is a fundamental intellectual assault on the entire New Deal edifice,'' he says. ''We want to withdraw judicial support for the entire modern welfare state. I'd retire and play golf if I could get there.''

II. Glory Days

ll restoration fantasies have a golden age, a lost world that is based, at least to a degree, in historical fact. For the Constitution in Exile movement, that world is the era of Republican dominance in the United States from 1896 through the Roaring Twenties. Even as the Progressive movement gathered steam, seeking to protect workers from what it saw as the ravages of an unregulated market, American courts during that period steadfastly preserved an ideal of free enterprise, routinely striking down laws that were said to restrict economic competition.

The most famous constitutional battle of the time was the 1905 Supreme Court case Lochner v. New York, which challenged a law that was passed by the New York State Legislature, establishing a maximum number of working hours for bakers. The court struck down the law on the grounds that it violated the bakers' freedom of contract, which was arguably, but not explicitly, included in the 14th Amendment's protections of ''liberty'' and ''property.'' In a dissenting opinion, Justice Oliver Wendell Holmes Jr. objected that ''The Fourteenth Amendment does not enact Mr. Herbert Spencer's Social Statics,'' referring to the celebrated Social Darwinist and advocate of laissez-faire economics.

Even after the election of Roosevelt in 1932, the Supreme Court continued to invoke laissez-faire economics to strike down federal laws, including signature New Deal legislation like the National Industrial Recovery Act. In February 1937, Roosevelt threatened to pack the court with justices who would presumably be more deferential to national regulation of the economy. Within a month, the court backed down, upholding a state law imposing a minimum wage for women and minors. (The majority opinion noted that ''the unparalleled demands for relief which arose during the recent period of depression'' had dislodged old laissez-faire nostrums about the equal bargaining power of workers and employers.) The following year, in the Carolene Products case, the court announced that it would uphold all economic regulations unless no reasonable person could believe them to be rational. Today, the conventional wisdom among liberal and conservative legal thinkers alike is that Lochner was decided incorrectly and that the court's embrace of judicial restraint on economic matters in 1937 was a triumph for democracy.

Members of the Constitution in Exile movement do not share this view. Not long ago, I visited Greve in his office on 17th Street in Washington. Greve, a witty and sardonic libertarian, is the American Enterprise Institute's John G. Searle Scholar (his benefactor was a pharmaceutical magnate), and over the course of a long conversation, he explained that 1937 was, in his opinion, an unmitigated disaster, resulting in the judicial abandonment of constitutional limits on government power that are inherent in the nature of a free society and the creation of a regulatory behemoth. As the administrative state ballooned during the 60's and 70's, judicial deference became even more pervasive: new independent regulatory agencies, from the Environmental Protection Agency to the Federal Communications Commission, began issuing a slew of regulations. To Greve's dismay, much of the regulatory state is politically quite popular; even a Republican Congress, he acknowledged, seems unlikely to roll back most post-New Deal programs and regulations. ''Judicial activism will have to be deployed,'' he said. ''It's plain that the idea of judicial deference was a dead end for conservatives from the get-go.''

Now 48, Greve was born in Germany and came to embrace a libertarian outlook during his undergraduate years at the University of Hamburg, from which he graduated in 1981. That year, he visited the United States on a Fulbright and ended up at Cornell for a doctorate in government. (''I consider myself a refugee from the welfare state,'' he said with a chuckle.) His Ph.D. contrasted liberal environmental litigation in Germany and the United States. Greve was frustrated but also impressed by the way that well-financed liberal groups like Ralph Nader's Public Citizen worked in the courts to expand the reach of environmental laws, and he decided that the conservative movement needed to create organizations that would do exactly the opposite.

One of Greve's goals at the American Enterprise Institute is to convince more mainstream conservatives that traditional federalism -- which is skeptical of federal, but not state, power -- is only half right. In his view, states can threaten economic liberty just as significantly as the federal government. He is still exercised by the lawsuit brought in the 90's by 46 states against the tobacco companies, which resulted in a $246 billion settlement. ''Taking the tobacco settlement down would have a huge public impact -- that would push you in the right direction,'' he said, taking a long drag on a cigarette.

Although Greve's liberal critics have argued that resurrecting strict constitutional limits on federal and state powers would essentially mean a return to the unregulated climate of the Gilded Age, Greve emphasized that he doesn't have the Gilded Age in mind. The ''modern, vibrant, mobile'' and global economy of the 21st century, he argued, is competitive enough to regulate itself in most areas. Though he envisions a role for government in protecting against egregious forms of coercion, force and fraud, all other abuses would be regulated by private agreements among citizens. ''I don't think much would be lost if we overturned federal wetlands regulations or if we repealed the Endangered Species Act, just by way of illustration,'' he said.

Greve expressed cautious optimism that his views will get a sympathetic hearing from some of the federal appellate judges renominated this year by the president. He said he is especially happy that Bush has tapped William Pryor, the former attorney general of Alabama. Greve noted that in one of the big Supreme Court cases involving the limits of federal power, which ultimately invalidated parts of the Violence Against Women Act, Pryor wrote a brief that Greve and other libertarians greatly admired. ''Bill Pryor is the key to this puzzle; there's nobody like him,'' Greve said. ''I think he's sensational. He gets almost all of it.''

III. The Network

he idea of creating a network of activist conservative litigation groups was proposed in the early 70's by Lewis Powell, a corporate lawyer and future Supreme Court justice. In the years following the defeat of the Goldwater Republicans in 1964, conservatives were casting about for a new political strategy. At the same time, business interests were alarmed by the growth of the regulatory state and, in particular, the marked increase in environmental litigation. In 1971, Powell wrote a landmark memo for the United States Chamber of Commerce urging a counterattack. In addition to encouraging conservatives to develop a systematic and long-term effort to spread their ideas in the media, Powell recommended that conservatives should get over their aversion to judicial activism. ''Especially with an activist-minded Supreme Court,'' he wrote, ''the Judiciary may be the most important instrument for social, economic and political change.''

At the time, Powell's idea was being echoed in California by a group of conservatives close to Ronald Reagan, who had recently been re-elected governor. Reagan, who pledged to reform welfare in his 1970 campaign, set up a task force to do so, headed by his chief of staff, Edwin Meese III. The resulting reforms, which restricted welfare eligibility and cut the state's welfare rolls by more than 250,000 in three years, were attacked in the courts by liberal groups. Reagan's supporters were infuriated that there were no conservative groups that could respond in kind. ''The liberals were using the courts,'' Meese recalled recently during a conversation in his office at the Heritage Foundation in Washington. ''We wanted to make it a fair fight.''

According to a history of conservative legal activism published by Heritage, ''Bringing Justice to the People,'' the first person to take up Powell's challenge, in the early 1970's, was John Simon Fluor, a wealthy Reagan supporter. Fluor was upset that environmental groups had managed to delay the construction of the Alaska pipeline and the initiation of offshore drilling in the Gulf of Mexico. After conversations with fellow Reagan supporters, including Meese, Fluor provided the seed money for the Pacific Legal Foundation, the first conservative property-rights litigation shop in the nation. It was staffed with members of the Reagan welfare-reform team and incorporated in 1973.

Other conservative business interests quickly replicated Fluor's model. In 1975, money from the major oil companies helped to create the National Legal Center for the Public Interest, an umbrella organization for several regional litigation groups. Each group's focus was determined by its location. The most influential spinoff group to emerge was the Mountain States Legal Foundation, financed by the beer magnate Joseph Coors, which was set up in 1977 to challenge federal land-use and natural-resources regulations, long a source of political resistance in the West. (The foundation's distinguished alumni of the period include Gale Norton, now secretary of the interior, and Jon Kyl, now a senator from Arizona.)

Though these conservative groups clearly served the interests of local businesses, they also attracted a number of libertarians, many of whom were not always consistent supporters of big business. One of the more thoughtful of these is Chip Mellor, who joined the Mountain States Legal Foundation in the late 70's and is now the head of the Institute for Justice, a libertarian public-interest law firm in Washington. When I visited him recently at his office near the White House (with an impressive corner view of the Old Executive Office Building), he spoke engagingly of his youthful idealism. ''I came out of the protests of the 1960's,'' he recalled, ''where I was dissatisfied with the right and the left.'' He immersed himself in the writings of Milton Friedman, the Nobel Prize-winning free-market economist, as well as those of the libertarian novelist Ayn Rand. ''It was quite illuminating for me to read Friedman and Rand and to realize that you could not divorce economic liberty and private property rights from the truly free individual,'' Mellor said. ''I came to see that societies where those rights were taken away inevitably led to people impoverished in monetary wealth and basic liberties.''

When he was a law student at the University of Denver, Mellor saw a recruiting flier for the Mountain States Legal Foundation and was intrigued by its mention of property rights. Sporting long hair and a handlebar mustache, he showed up without an appointment, but hit it off nevertheless with the foundation's president, James Watt. (Watt would later achieve renown for his knockdown battles with environmentalists as Reagan's secretary of the interior.) By 1982, Mellor had risen to become the acting president of the foundation, and he soon hired a young law-school graduate and fellow libertarian named Clint Bolick. The two became fast friends and pledged to sustain their passion for libertarian principles above partisan politics. (A fierce defender of Clarence Thomas during his nomination battle, Bolick left the Republican Party not long ago in protest over its anti-immigrant policies and the Iraq war.)

Bolick, whose sunny idealism is hard to resist, still gets indignant when he recalls how Mellor came to part ways with Mountain States. It began when the foundation filed a free-speech lawsuit opposing an exclusive cable-TV franchise granted by the city of Denver to a local businessman who happened to be a friend of Joseph Coors. When Coors resigned from the board to protest the direction that Mountain States seemed to moving in, it set in motion a process that led, a year later, to Mellor being fired. ''Chip and I discovered that there is a world of difference between an organization that is pro-business and an organization that is pro-free enterprise,'' Bolick told me recently. ''We learned that some of the influential backers of the movement were more pro-business than pro-free enterprise.'' After the firing, Mellor said, he and Bolick sat in Mellor's backyard with tears in their eyes. ''We pledged this is wrong, and someday we're going to do it right,'' he said.

They soon got their chance. After stints in Washington with the Reagan administration, in which Mellor was a deputy general counsel at the Department of Energy and Bolick was an assistant at the Equal Employment Opportunity Commission (then led by Clarence Thomas), the two men, in 1991, persuaded Charles Koch, an oil and gas magnate, to give them $350,000 a year in seed money from his private foundation to start the Institute for Justice. (To this day, the institute does not actively solicit corporate financing, and its $6.6 million annual budget is far lower than those of its liberal counterparts, like the A.C.L.U.) Before long, Mellor and Bolick had achieved victories in lower courts for clients without deep pockets. In a series of cases, they challenged state licensing laws that made it hard for small-business entrepreneurs to break into highly regulated professions. Their successful clients included limo drivers in Las Vegas, African-American hair braiders in San Diego and casket sellers in Tennessee. When Mellor gave me a tour of his office, he proudly pointed out an engraved tombstone of appreciation from the casket sellers, which sits in the institute's reception area.

IV. The (Other) Rights of Man

efending the right of small businessmen to challenge local monopolies may have been necessary and noble, but for the movement it represented a small piece of the puzzle. If Mellor and Bolick and others like them were to transform the Supreme Court's approach to the entire post-New Deal regulatory state -- to ''resurrect the Constitution in Exile,'' as Bolick puts it -- they would have to develop a sophisticated jurisprudential framework.

Early on, the movement found its intellectual guru in Richard Epstein. In the words of Michael Greve, Epstein is ''the intellectual patron saint of everybody in this movement.'' Like Bolick, Epstein is too much of a libertarian purist to be a party loyalist. (''Our president is a most inconsistent classical liberal, to be charitable,'' he says. ''He's terrible on trade and a huge spender and not completely candid about the parlous situation Social Security is in.'') But his devotion to -- and influence on -- the Constitution in Exile is unsurpassed.

''Takings: Private Property and the Power of Eminent Domain,'' still in print 20 years after its publication, purports to specify the conditions under which government can rightfully impose regulations and taxes that reduce the value of private property. Drawing on the political philosophy of John Locke, Epstein argues that before the existence of government, individuals in what political theorists call the ''state of nature'' have an inherent right of autonomy, which entitles them to acquire property by dint of their labor and to dispose of it only as they see fit through voluntary transfer of goods. Epstein also maintains that any form of government coercion -- including taxation or other forced transfers of wealth -- can be reconciled with the principles of personal freedom only if it makes individuals at least as well off as they were before the tax or regulation was imposed. Epstein's key insight, as the Constitution in Exile adherents see it, is that economic regulations are just as coercive as other involuntary wealth transfers. He insists that if the government wants to reduce the value of an individual's property -- with zoning restrictions, for example -- it has to compensate him for the lost value.

Moving from political theory to constitutional law, Epstein argues that the framers of the United States Constitution recognized these limitations on governmental power in the Takings Clause of the Constitution, which says that ''private property'' cannot be taken for public use ''without just compensation.'' According to Epstein, the Takings Clause prevents the government from redistributing wealth in any form without appropriate compensation and that a proper understanding of the clause calls into question ''many of the heralded reforms and institutions of the 20th century: zoning, rent control, workers' compensation laws, transfer payments,'' as well as ''progressive taxation.'' Liberal governmental reforms could be sustained, Epstein argues, only if the government were to compensate individuals for the lost value of their property or to make everyone better off in exchange for their taxes. ''This simple theory of governance could be expanded to cover all taxes, all regulations, all shift in liability schemes,'' Epstein wrote in an intellectual autobiography. ''It is also the recipe for striking down the New Deal.''

''Takings'' made Epstein a star on the Republican circuit, and he quickly became a favorite intellectual of Edwin Meese, then Reagan's attorney general. (Perhaps inspired by Epstein's arguments, Meese once announced at a Justice Department conference that a ''revolution'' in economic liberty was a possibility.) In 1986, Meese's office contacted Epstein and asked him to make a scholarly inquiry into Congress's power to regulate interstate commerce. The following year, Epstein published the results of his research in ''The Proper Scope of the Commerce Power'' (the article that Clarence Thomas would apparently later draw on in his Lopez opinion). Epstein argued that before the New Deal, Congress had the power to regulate only the channels of interstate commerce (railroads, for example) but not manufacturing, which doesn't qualify as commerce, or the trade of goods that don't cross state lines. The court, he maintained, was wrong, in its landmark 1942 ruling in Wickard v. Filburn, to allow the federal government to regulate the wheat production of a farmer who grew it for his own consumption. (The government had argued that private consumption was reducing demand for wheat that traveled across state lines.) Though he dutifully noted that his conclusion ''seems radical,'' Epstein called on the court to reverse its error by returning to the more limited pre-New Deal understanding of Congress's power to regulate the economy.

From the outset, Epstein's ideas ran into resistance from traditional judicial conservatives. In October 1984, Epstein clashed publicly with Antonin Scalia, his former colleague at the University of Chicago, in a panel discussion convened at the libertarian Cato Institute. Scalia, speaking first before a standing-room-only crowd, defended the view that judges should restrain themselves from overturning legislation in the name of rights or liberties not clearly and expressly enumerated in the Constitution. ''Every era raises its own peculiar threat to constitutional democracy,'' he said. ''The reversal of a half-century of judicial restraint in the economic realm'' -- Epstein's stated project -- ''comes within that category.'' As a traditional federalist, Scalia had his own qualms about the unconstitutionality of unlimited federal power, but he was not in favor of striking down laws in the name of ambiguous and contestable economic rights. Scalia argued that conservatives who had criticized earlier courts, like the Warren court, for liberal judicial activism now faced a ''moment of truth.'' They had to show the courage to reject conservative judicial activism as well.

When Epstein heard what Scalia had to say, he threw away his prepared remarks and delivered a spontaneous attack. Freely admitting that he was questioning the conservative ''conventional wisdom,'' Epstein insisted that judges should be much more aggressive in protecting economic liberty. ''There are many blatantly inappropriate statutes that cry out for a quick and easy kill,'' Epstein said, citing minimum-wage laws and other ''legislative regulation of the economy.'' He excoriated the Supreme Court for refusing to strike these laws down. ''One only has to read the opinions of the Supreme Court on economic liberties and property rights to realize that these opinions are intellectually incoherent,'' he concluded. ''Some movement in the direction of judicial activism is clearly indicated.''

V. Permanent Exile?

y 1995, the Constitution in Exile movement had reached what appeared to be a turning point. The Republicans had recently taken over both houses of Congress after pledging, in their Contract With America, to rein in the federal government. And the Supreme Court, by rediscovering limits on Congress's power in Lopez, seemed to be answering the call. For conservative advocacy groups and public-interest law firms, the possibilities for litigation looked encouraging.

In a reflection of the new mood, Douglas Ginsburg wrote an article in Regulation, a libertarian magazine published by the Cato Institute, calling for the resurrection of ''the Constitution in Exile.'' He noted that for 60 years, proper constitutional limits on government power had been abandoned. ''The memory of these ancient exiles, banished for standing in opposition to unlimited government,'' he wrote with a hint of wistful grandiosity, ''is kept alive by a few scholars who labor on in the hope of a restoration, a second coming of the Constitution of liberty -- even if perhaps not in their own lifetimes.'' While not all the leaders of the movement immediately embraced Ginsburg's catch phrase (Edwin Meese says that the phrase Constitution in Exile suggests incorrectly that they have retired from the field of battle), among some legal conservatives it became a rallying cry.

The restoration did not occur. The Rehnquist court in recent years has proved more sympathetic to enforcing limits on Congress's power than any court since 1937: between 1995 and 2003, the court struck down 33 federal laws on constitutional grounds -- a higher annual rate than any other Supreme Court in history. But the so-called federalism revolution on the Rehnquist court did not deliver all of what the proponents of the Constitution in Exile had hoped. Every time a lower court appeared to be on the brink of successfully striking down a federal statute with substantial political support, like the Endangered Species Act, the Supreme Court wrote a hedging opinion reassuring the country that the justices intended to challenge Congressional power only at the margins.

''I think we failed,'' Michael Greve said flatly when I asked him about the past decade of Supreme Court litigation. ''There are encouraging signs that with the right strategic moves you can make some headway, until the court looks the principle in the eye and says, 'Oh, my God,' and pulls back.'' He rattled off a series of property-rights cases in which the Supreme Court had declared (in his mocking paraphrase), ''Oh, no, this would be too inconvenient, too constraining for government.''

During the current term, the Supreme Court has heard three cases involving questions of economic liberty that, according to Greve, represent the most significant tests in a decade of the power of the Constitution in Exile movement. Kelo v. New London, which was argued before the court in February, concerned Susette Kelo, a woman who sued the city of New London, Conn., after it used its power of eminent domain to seize 90 acres of property, including her house. The city planned to turn the parcel over to a private developer in order to increase the tax base and revitalize the city. Chip Mellor's organization, the Institute for Justice, represented Kelo, whom the institute's lawyers had sought out because she seemed like a sympathetic victim. Standing before the justices, Kelo's lawyer, Scott G. Bullock, asked the court to reject the claim that as long as the state could point to a plausible public purpose for the taking of private property (like increasing the tax base), it could appropriate people's homes. Justice Sandra Day O'Connor, however, seemed unimpressed by the suggestion that courts should second-guess the economic judgments of legislatures.

O'Connor and other justices seemed similarly skeptical during the second case, Lingle v. Chevron, U.S.A., which they heard later that same morning. Lingle involved a challenge to a rent-control regulation in Hawaii. Richard Epstein filed a brief for the Cato Institute that argued that the court should abandon its longstanding presumption that economic regulations are rational and ask instead whether the law, in fact, makes economic sense or is simply a ''naked wealth transfer.''

Randy Barnett, a libertarian scholar at the Boston University School of Law and the Cato Institute, was the plaintiff's lawyer in Ashcroft v. Raich, another key Supreme Court showdown, which was argued before the court last fall. Raich is a challenge to the federal government's attempt to enforce drug laws that conflict with the effort by California (and 10 other states) to allow the use of medical marijuana. Barnett represented Angela Raich, a woman who suffered from cancer that often confined her to a wheelchair but who said she felt much better after being prescribed medical marijuana. The author of a provocative book, ''Restoring the Lost Constitution,'' Barnett argues that courts should evaluate economic regulations with a ''presumption of liberty'' rather than with a presumption of deference. His book identifies a series of regulations that he says the courts should consider constitutionally suspect, from environmental laws to laws forbidding the mere possession of ordinary firearms, therapeutic drugs or pornography. ''The court has not really limited Congress's power very much,'' Barnett says. ''But the fact that it was willing to limit it at all has been an important principle. If it now basically throws in the towel, it will be pretty demoralizing to this whole side.''

In February, a day after the Kelo and Lingle cases were argued before the court, I phoned Epstein and asked him how he thought they had gone. ''I think the exile's going to be a little longer after yesterday,'' he said with a sigh. ''It's a very sad day to watch these guys work.'' Epstein expressed confidence that even if his side loses, the battle for the Constitution in Exile will continue at the state level -- ''the emotional grab of those eminent-domain cases is so strong,'' he said -- but confessed that he had little hope, for now, in the Supreme Court. ''They really have gone back to the extreme 1937 reaction that anything that concerns the economic well-being of this nation is simply a political matter,'' he said. ''If the Constitution is an annoying obstacle, they'll just get it out of their way.''

VI. Packing the Courts

f supporters of the Constitution in Exile lose all three cases now before the Supreme Court, what happens next? The general consensus, according to Greve, is that the movement should focus its energies on the appointment of sympathetic judges. ''I think the judicial appointments are what matters most of all,'' Greve says. ''And Bush's renomination of the rejected judges is a way of saying, Let's cram the same judges back in their face. That's intended as a sign that they mean business.''

Three candidates recently renominated by Bush for positions on the federal appellate courts are sympathetic to the ideas of the Constitution in Exile movement. In addition to William Pryor, the former attorney general of Alabama whom Greve praises, there is Janice Rogers Brown, a justice on the California Supreme Court and an outspoken economic libertarian. An African-American and a daughter of sharecroppers, Brown has been promoted by many libertarians as an ideal Supreme Court candidate. Known for her vigorous criticism of the post-New Deal regulatory state, Brown has called 1937, the year the Supreme Court began to uphold the New Deal, ''the triumph of our socialist revolution,'' adding in another speech that ''protection of property was a major casualty of the revolution of 1937.'' She has praised the court's invalidation of maximum-hour and minimum-wage laws in the Progressive era, and at her Senate confirmation hearing in 2003, she referred disparagingly to ''the dichotomy that eventually develops where economic liberty -- property -- is put on a different level than political liberties.''

From Greve's point of view, another sympathizer whom Bush has nominated for a federal appellate judgeship is William G. Myers III, who was the chief lawyer at the Department of the Interior and a lifelong advocate for mining and grazing interests. Democrats in the Senate have expressed special concern about Myers's narrow view of Congress's power to pass environmental regulations: he has criticized the ''fallacious belief that the centralized government can promote environmentalism'' and has denounced the Endangered Species Act and Clean Water Act as ''regulatory excesses.'' He also helped to found Cattlemen Advocating Through Litigation, a conservative group that challenges environmental regulations in court. On March 17, he was the first candidate approved by the Judiciary Committee, on a party line vote.

For Democrats in the Senate, a main cause of concern is not only the principles that these judges embrace but also the potential conflicts of interests that their loyalties can create. For example, Douglas Ginsburg, the judge who introduced the phrase Constitution in Exile, serves on the board of a group called the Foundation for Research on Economics and the Environment, or FREE, which favors free-market solutions to environmental problems. As Douglas Kendall of the Community Rights Counsel, an environmental watchdog group, has reported, between 1992 and 2001 Ginsburg took more than a dozen all-expenses-paid trips, mainly to Montana, under FREE's auspices, where he often participated in its judicial-education seminars. In 1999, a constitutional challenge to emission regulations in the Clean Air Act was accepted for argument before Ginsburg. The lawyer who was challenging the regulations on behalf of several industry groups, Edward Warren, had also served on the board of FREE. Ginsburg joined an opinion accepting Warren's argument that the emission regulations were unconstitutional. A dissenting opinion charged the majority with ignoring ''the last half century of Supreme Court jurisprudence,'' and the Supreme Court unanimously reversed the decision two years later in an acerbic opinion written by Scalia.

The battle over the ideologies and allegiances of appellate judges is, of course, something of a dress rehearsal for the Supreme Court nomination to come. Greve and his colleague Christopher DeMuth, the president of the American Enterprise Institute, say they are heartened by the judges reportedly on Bush's short list, many of whom they consider broadly sympathetic to their views. ''I think the president and his top staff have shown really good taste in their court of appeals nominations,'' DeMuth told me during a visit to the institute, ''and when the Supreme Court opening comes up, they will be very strongly inclined to nominate people from our side.''

DeMuth was especially enthusiastic about the possible candidacy of Michael W. McConnell, a federal appellate judge in Denver and a former University of Chicago law professor who worked with DeMuth at the Office of Management and Budget in the Reagan administration. Greve explained that McConnell not only has ''impeccable social conservative credentials'' but also will ''give you a vision of federalism that looks like the Constitution we once had, and he's intellectually powerful enough to pull it off on the court.'' Most of the other names on Bush's short list have similar qualities: J. Michael Luttig, a federal appellate judge in Virginia, is a vigorous proponent of the view that some federal environmental laws exceed Congress's powers to regulate interstate commerce; John Roberts, a federal judge in Washington, has also questioned whether some applications of the Endangered Species Act exceed Congress's regulatory powers.

The influence of the Constitution in Exile movement on judicial nominations is not always clear, since the concerns of the White House often overlap with concerns of conservatives broadly sympathetic to business interests or the concerns of more traditional federalists. ''If you mentioned the phrase 'Constitution in Exile' in White House meetings I was in, no one would know what the hell you were talking about,'' a former White House official, who spoke on condition of anonymity because of the sensitivity of the topic, told me. ''But a lot of people believe in the principles of the movement without knowing the phrase. And the nominees will reflect that.'' According to the former official, during Bush's first term, David S. Addington, the vice president's counsel, would often press the Justice Department to object that proposed laws and regulations exceeded the limits of Congress's power. ''People like Addington hate the federal government, hate Congress,'' the former official said. ''They're in a deregulatory mood,'' he added, and they believe that ''the second term is the time to really do this stuff.''

VII. America, Deregulated

f they win -- if, years from now, the Constitution is brought back from its decades of arguable exile -- and federal environmental laws are struck down, the movement's loyalists do not expect the levels of air and water pollution to rise catastrophically. They are confident that local regulations and private contracts between businesses and neighbors will determine the pollution levels that each region demands. Nor do they expect vulnerable workers to be exploited in sweatshops if labor unions are weakened: they anticipate that entrepreneurial workers in a mobile economy will bargain for the working conditions that their talents deserve. Historic districts, as they see it, will not be eviscerated if zoning laws are scaled back, but they do imagine there will be fewer brownstones and more McMansions. In exchange for these trade-offs, they insist, individual liberty -- the indispensable guarantee of self-fulfillment and happiness -- would flourish far more extensively than it does today.

Of course, there would be losers as well as winners in a deregulated market economy, and history provides plenty of reasons to be concerned about the possibility of abuse. Even the relatively modest deregulation of today's increasingly global and fluid U.S. economy may provide something of a cautionary tale. From Enron to illegal trading by mutual funds and bid-rigging in the insurance industry, corporate scandals are keeping consumer advocates like Eliot Spitzer quite busy. America, at the moment, is engaged in an important debate about the relative merits and dangers of the market economy, and the advocates of the Constitution in Exile are aware that they cannot achieve ultimate success without persuading a majority of the American people to embrace their vision.

But a political transformation in their favor remains, for the moment, remote, and they appear content, even eager, to turn to the courts to win the victories that are eluding them in the political arena. Advocates of the movement are entirely sincere in their belief that the regulatory state is unconstitutional as well as immoral and that a principled reading of the Constitution requires vigorous enforcement of fundamental limits on state power. Nevertheless, it is a troubling paradox that conservatives, who continue to denounce liberals for using courts to thwart the will of the people in cases involving abortion and gay marriage, now appear to be succumbing to precisely the same temptation. If the lessons of the past 60 years teach us anything, when judges try to short-circuit intensely contested democratic debates, from the New Deal cases to Roe v. Wade, they may provoke a fierce political backlash that sets back the movement they are trying to advance. In this sense, even if the Constitution in Exile movement manages to transform the courts before it has transformed the country, it may find that it has won less than it hoped.