The Supreme Court heard more than three hours of oral arguments Jan. 17 in a case that conservatives hope will reduce the authority of federal regulatory agencies and that the Biden administration warned could cause a “convulsive shock to the legal system.”
At stake is the Chevron doctrine, the result of a 1984 Supreme Court ruling (Chevron U.S.A. v. Natural Resources Defense Council) in which the court set out a two-step process for judicial review of administrative actions: The court must first decide if Congress had spoken on the issue. If so, its intent must be followed. If the statute’s meaning is unclear, and the agency action was reasonable, the court should defer to the agency rather than imposing its preference.
The challenge — Relentless, Inc., v. the Department of Commerce and Loper Bright Enterprises v. Gina Raimondo, Secretary of Commerce — asks the court to overturn a Commerce Department rule requiring herring fishermen to pay for monitors hired to enforce rules against overfishing.
The question presented to the court is whether it “should overrule Chevron or at least clarify that statutory silence concerning controversial powers expressly but narrowly granted elsewhere in the statute does not constitute an ambiguity requiring deference to the agency.”
It’s clear that at least some of the court’s conservative majority want to narrow, if not reverse Chevron.
Justice Neil Gorsuch urged his colleagues to take action in a 2022 dissent, writing that Chevron “deserves a tombstone no one can miss.” (Ironically, Gorsuch’s mother, Anne, headed EPA during the Reagan administration, when Chevron was handed down — a ruling that upheld the agency’s relaxation of pollution rules.)
The Biden administration says Chevron is a “bedrock principle of administrative law,” having been cited by federal courts more than 18,000 times, including more than 70 Supreme Court rulings. Supporters, including the Natural Resources Defense Council, say it is needed to ensure the more than 650 federal judges do not issue conflicting rulings that would prevent industry from having regulatory certainty.
Attorney Roman Martinez, who argued on behalf of fishing company Relentless Inc., contended that Chevron conflicts with the Constitution’s directive that judges “apply their own independent judgment” and eliminates a needed check on executive power. Chevron opponents say it undermines regulatory certainty because it allows agencies to change policies with new administrations.
Much of the arguments revolved around the practical impact of overturning Chevron. Martinez argued that the doctrine of stare decisis would prevent a flood of relitigation for cases that were settled using the Chevron doctrine.
Justice Amy Coney Barrett asked whether that would really be the case.
“So, isn’t it inviting a flood of litigation even if for the moment those holdings stay intact?” she asked.
Any such arguments would have to overcome the stare decisis test, which would mean showing the agency is “really wrong” and the issue “really practically important,” said Martinez.
Martinez said the court could revert to the Skidmore standard, which allows a federal court to confer greater or lesser deference based on the agency’s ability to support its position. “We would be very comfortable with Skidmore,” he said.
But Justice Elena Kagan dismissed “the idea that Skidmore is going to be a backup once you get rid of Chevron.”
“Skidmore has always been nothing,” she said.
Drug or Dietary Supplement?
Kagan asked Martinez about a couple of examples from Chevron cases in the past, such as whether a new product meant to promote healthy cholesterol levels is a drug or a dietary supplement.
Martinez said it would depend on the understanding of the text in the relevant statute — a legal question for the courts.
If the law is ambiguous on that question, should the court make the call without deference to the regulator? Kagan asked.
“There are going to be hard questions, but I think the court would bring all the traditional tools of construction to bear,” Martinez said.
Courts are very rarely in the position of having to overturn a decision where an agency thinks the law means one thing, but the court says another, Kagan said.
“Sometimes there’s a gap. Sometimes there’s a genuine ambiguity. … In that case, I would rather have people at [Health and Human Services] telling me whether this new product was a dietary supplement or a drug.”
Gorsuch acknowledged that Kagan’s examples were difficult legal questions.
“One option would be to say it’s ambiguous and, therefore, the agency always wins,” Gorsuch said. “That’s what I understood Chevron to mean, at least coming in here today.”
Gorsuch and Martinez then got into a back and forth about how regulations can go through some major changes depending on which party is in the White House.
“Chevron really is a reliance-destroying doctrine,” Martinez said. “Imagine if you’re a person or a regulated entity and you’re trying to figure out what the law is. You should be able to rely on the best interpretation of the law and not have to, you know, check the [Code of Federal Regulations] every couple years to see if the law has somehow changed, even though Congress hasn’t acted.”
Shock to the System
Solicitor General Elizabeth Prelogar said that overturning Chevron would be a shock to the system.
“The Chevron framework is a bedrock principle of administrative law with deep roots in this court’s jurisprudence,” Prelogar said. “Overruling a precedent is never a small matter, but overruling a precedent as foundational as Chevron should require a truly extraordinary justification, and petitioners don’t have one.”
Gorsuch, however, said Chevron can lead to plenty of instability.
“Each new administration can come in and undo the work of a prior one,” Gorsuch said. “[The rules are] all reasonable,” he joked, prompting laughter. “I mean, my goodness, the American people elect them.”
Prelogar argued that such instances are rare.
“Agencies themselves build on those regulations as a foundation,” Prelogar said. “There’s no evidence that agencies are out there flip-flopping left and right or doing so on a whim.”
Justice Ketanji Brown Jackson said that such changes are inherent in the democratic form of government, where presidents are elected based in part on voters’ preferred policy determinations.
“I guess my concern is, I suppose judicial policymaking is very stable, but precisely because we are not accountable to the people and have lifetime appointments,” Jackson said. “So, if we have gaps and ambiguities in statutes and the judiciary is coming in to fill them, I suppose we would have a … separation of powers concern related to judicial policymaking.”
Chief Justice John Roberts asked Martinez how pertinent the Chevron issue was because the Supreme Court rarely uses the precedent in its opinions, having last done so in 2016.
Martinez said the lower courts use it and that the two fishery cases show the main issue with its application.
“They’re essentially getting to a point where they don’t really have to figure out the best answer. … Instead of asking what does the statute mean, they can ask a different threshold question, which is, is this statute ambiguous enough that we should just, you know, let the agency do the work for us?” Martinez said.
Conflicting Rulings
The challenge drew more than 70 friend-of-the-court briefs, mostly from conservative-leaning organizations. The New York Times reported this week that the lawyers representing one set of plaintiffs, who are working pro bono, also work for Americans for Prosperity, an anti-regulatory group funded by Charles Koch, the chairman of Koch Industries.
In its amicus brief, the NRDC noted that it supports Chevron even though it was the losing plaintiff in the case that produced the precedent.
The cases that produced Chevron stemmed from 1977 Clean Air Act amendments that required large new stationary sources located in the nation’s most polluted areas to use the most stringent emission controls.
In 1980, EPA issued a regulation that applied these requirements whenever a large new industrial unit, such as a boiler or blast furnace, was added. Under Anne Gorsuch, EPA reversed its position and allowed states to avoid the requirements by redefining “source” as an entire industrial plant.
The change, which became known as the “bubble concept,” meant that most large new industrial projects were exempt from the new requirements.
The D.C. Circuit Court of Appeals ruled three times on the matter, with two panels reaching opposite conclusions about the “bubble concept” before the court, in an opinion by Ruth Bader Ginsburg, overturned the EPA rule. The Supreme Court overruled the Ginsburg ruling, holding that EPA’s plant-wide definition of the term “source” was a “permissible construction of the statute.”
“NRDC could well win more cases if Chevron is overruled,” the group wrote the court. “After all, NRDC challenges more agency actions than we defend, and agency interpretations generally fare better under Chevron than they do without it.”
