Ryan’s War on Regulations Starts With Chevron Case

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By Chris Opfer

July 20 — House Speaker Paul Ryan (R-Wis.) is ramping up his criticism of White House overregulation in the administration’s waning days, but Republican lawmakers’ real beef is with a decades’ old U.S. Supreme Court decision expected to remain in place long after the next inauguration.

Ryan railed against “arrogant bureaucracy” and “pointless mandates” from the White House in his July 19 Republican Convention speech, charging that administration officials “just make it up as they go along.”

The speaker, who has made regulatory reform a centerpiece of his “better way” agenda, is also taking aim at a 1984 U.S. Supreme Court ruling that often forces courts to defer to many of the agency actions that GOP lawmakers find most offensive.

The high court held in Chevron U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984), that judges must defer to agency interpretations of ambiguities in the laws they administer, unless those rulemakings are unreasonable.

The decision makes it harder for opponents of a wide range of administrative actions, including the Labor Department’s new overtime rule (RIN:1235-AA11), to challenge the moves.

The House passed legislation ( H.R. 4768) earlier this month that would scrap the Chevron decision and direct courts to review agency regulations “de novo,” or without any special regard for the government’s position.

The measure is a long shot for being signed into law but is likely to be part of a long to-do list if Republicans manage to win the White House and retain control of Congress.

“If somehow a bill undoing Chevron deference were to become law, that would have enormous ramifications in just about every area of law,” Paul DeCamp, who ran the DOL’s Wage and Hour Administration during the George W. Bush administration, told Bloomberg BNA July 20.

“Certainly it would affect overtime, other areas of employment law and all kinds of federal regulatory activities unrelated to employment,” he said.

Separation of Powers Questions

The Chevron case centered on Environmental Protection Agency regulations—interpreting the Clean Air Act—on permitting requirements for power plants.

An appeals court found that the EPA exceeded its authority in interpreting the permitting requirements. The high court held, however, that the agency permissibly interpreted the term “stationary source,” left ambiguous by the CAA’s drafters, to include all pollution-emitting devices within a single plant.

“Sometimes the legislative delegation to an agency on a particular question is implicit rather than explicit,” Justice John Paul Stevens wrote, delivering the court’s opinion in a 6-0 decision in which three justices were recused. “In such a case, a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency.”

The decision has raised all kinds of questions about what makes a term ambiguous and what’s a reasonable interpretation of unclear legislative language. Attorneys generally agree that the ruling has also made it more difficult to challenge agency actions in court.

“There is no question that Chevron moves power from the courts to the agencies,” Fordham University law professor Aaron Saiger told Bloomberg BNA July 19. “But the courts still get to decide whether the statute being interpreted is ambiguous and whether the interpretation is reasonable.”

GOP Displeased With Obama's Labor Initiatives

Questions may come up in challenges to the wide variety of labor initiatives that have come out of the Obama administration, such as the Labor Department’s new overtime rule and the National Labor Relations Board’s 2014 changes to union representation election rules.

GOP lawmakers have taken aim at those moves in particular, but they also want to protect against additional regulatory action by scrapping Chevron deference altogether.

House Judiciary Committee Bob Goodlatte (R-Va.) said during a June markup of the bill that the Chevron standard “bleeds out of the judicial branch power to interpret the law, transfusing that power into the executive branch.”

He added that the measure would also undo a related Supreme Court decision— Auer v. Robbins, 519 U.S. 452 (1997)—in which the justices held that agency interpretations of their own regulations are entitled to similar deference.

Recipe for Chaos?

Although the overtime rule has generated strong opposition from Republicans and business groups, even the most vocal critics concede that the Labor Department generally has the authority to interpret the Fair Labor Standards Act’s “white collar” exemptions.

The FLSA exempts employees working in a “bona fide executive, administrative, or professional capacity” from requirements that they be paid at least the federal minimum wage and get time-and-a-half pay for all hours worked in excess of 40 per week.

The law specifically leaves it to the labor secretary to define those terms and to update the definition as needed.

Labor Department regulations interpreting the FLSA currently require workers to make more than $23,660 and perform certain managerial duties to qualify for the exemption. The new rule—slated to take effect in December—is expected to make some 4 million workers newly eligible for overtime pay by doubling the salary threshold.

DeCamp, now an attorney with Jackson Lewis and an overtime rule critic, said the legislation to undo Chevron is a long shot. He and Saiger also said a shift to de novo review could cause chaos, creating a mashup of decisions in which some federal courts strike down an agency interpretation of a statute and others support it.

Decision Creates Presumption About Regulations

Chevron creates a strong presumptive starting point that regulations are valid,” DeCamp told Bloomberg BNA. “When you have that kind of strong presumption, you don’t have every court left on its own to decide whether a particular regulation is a good thing or a bad thing.”

That's not to say that courts always side with agencies. Some overtime opponents think they could have a pretty good case challenging a part of the rule that automatically increases the salary threshold every three years without requiring the DOL to go through new notice and comment rulemaking.

A federal judge in Texas in late June pumped the brakes on the DOL’s persuader rule (RIN:1245-AA03), finding that business groups challenging the regulation were likely to succeed ( Nat’l Fed’n of Indep. Bus. v. Perez, N.D. Tex., No. 16-66).

The judge said the rule, requiring employers to disclose information about attorneys and consultants hired to sway workers against unionization, appears to violate the Labor-Management Reporting and Disclosure Act’s plain language.

Still, Republicans want to make sure federal agencies give regulations a long look before putting them in place.

House GOP lawmakers are pushing separate legislation ( H.R. 185) that would require agencies to hold hearings and issue advance notices of certain major rules, and to adopt the least costly alternative. The bill would also authorize courts to review interim rules before they go into effect.

To contact the reporter on this story: Chris Opfer in Washington at copfer@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

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