Supreme Court Chipping Away at Agency Deference

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By Patrick Ambrosio and Kimberly Robinson

Oct. 19 — At the U.S. Supreme Court, “several justices are sending a message that they are looking to rein in federal agencies, and are poised to do so this Term,” Helgi C. Walker of Gibson, Dunn & Crutcher LLP, Washington, told Bloomberg BNA.

She said that two administrative law cases in particular show that the court “is prepared to insist that agencies’ statutory interpretations stay grounded in the statutory text,” referring to Hawkins v. Cmty. Bank of Raymore, No. 14-520, argued 10/5/15, and Sturgeon v. Masica, review granted, 84 U.S.L.W. 3163 (U.S. Oct. 1, 2015) (No. 14-1209).

“That has always been the law, but the Court appears inclined to enforce it with a renewed vigor,” Walker said in an Oct. 17 e-mail.

Several recent decisions by the U.S. Supreme Court have already “chipped away” at the level of deference the Environmental Protection Agency can expect to receive from courts over interpretations of ambiguous statutory language, an agency attorney said Oct. 15.

Chevron No Longer King?

Aditi Prabhu, an attorney in the EPA Office of General Counsel, said there has been a trend in the Supreme Court questioning the deference the EPA should receive, though she said there is no indication that there are enough votes to overturn the two-part test that the court established for judicial review of agency interpretation. Prabhu spoke during a webinar hosted by the Environmental Law Institute.

The Supreme Court's 1984 decision in Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc. established a two-part test for review of agency action, which first requires a court to decide if the plain language of the law is not clear.

If the court decides the law is ambiguous, the court must then decide under a deferential standard whether an agency's interpretation of the statute is permissible (Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984)).

Prabhu said one issue with Chevron deference raised in recent Supreme Court decisions is the court's ability to bypass the Chevron doctrine completely at step one.

Describing it as “Chevron avoidance,” Prabhu said it was most explicit in the court's June ruling to uphold the federal government's decision to make federal tax credits available under the Affordable Care Act in states that didn't set up their own health care exchanges (King v. Burwell, 83 U.S.L.W. 4541, 2015 BL 202885 (U.S. June 25, 2015).

Chief Justice John G. Roberts Jr. wrote in King v. Burwell that it was an “extraordinary case” that was outside Chevron's domain because of the “deep economic and political significance” of the tax credit issue. He also said it was unlikely that Congress would have intended to leave such an interpretation to the Internal Revenue Service, which has no experience in health care policy.

Roadmap on Step One?

Walker said Hawkins may also implicate Chevron’s so-called step one analysis.

There, the “Federal Reserve Board extended the non-discrimination protections of the Equal Credit Opportunity Act, which the statute applies only to loan ‘applicants,' to loan guarantors (usually spouses of loan applicants),” Walker said.

“The Fed did so because it thought that was good policy, and pretty much said so,” she said.

But Walker said that while “the government in its amicus brief seeks deference for the Fed’s reading of the statute, it is a stretch to say that the statutory reference to ‘applicant' includes ‘guarantor.' ”

“The case thus has all the flavor of an agency ignoring the statutory text and making policy itself,” she said.

“The Court could well reject the government’s regulation under” Chevron’s step one analysis, “where no deference is due to the agency, as contrary to the plain language of the statute,” Walker said.

“Notably, there are only a handful of cases in the entire history of the Supreme Court, since Chevron, striking down an agency rule at step one. If the Court lays down a roadmap to lower courts to take step one seriously, that would be a major shift in the landscape of administrative law.”

Walker added that at the Hawkins oral argument, “several justices seemed to think the government’s interpretation of the statute was simply not plausible.”

Restricting Authority?

But Walker said the case to watch is Sturgeon v. Masica, which she said has been granted but not yet briefed or argued.

“The case is about whether the National Park Service is entitled to regulate certain lands in Alaska when the Alaska National Interest Lands Conservation Act prohibits the National Park Service from exercising regulatory control over certain land within the National Park system,” Walker said.

“It’s interesting, among other reasons, because the Solicitor General opposed cert. on the ground of deference for the agency’s interpretation of the statute, and the Court took the case anyway.”

Sturgeon is one of a handful of cases this term that the court will hear over the solicitor general's recommendation.

Walker said Sturgeon “has some powerful facts,” which could make for “powerful administrative law.”

The “petitioner, Mr. Sturgeon, was approached by armed National Park Service employees for operating his hovercraft on certain waters while hunting and later threatened with a criminal citation if he did so again,” Walker explained.

She added that “doctrinally, just as King v. Burwell announced a new administrative law principle that agencies do not get deference for their statutory interpretations on issues that are too important for Congress to delegate, it is possible for the Court in Sturgeon to say that agencies do not get deference at all (or get less) for interpretations of statutes that restrict, rather than expand, their authority.”

To contact the reporters on this story: Patrick Ambrosio in Washington at pambrosio@bna.com and Kimberly Robinson in Washington at krobinson@bna.com

To contact the editors responsible for this story: Larry Pearl at lpearl@bna.com and Jessie Kokrda Kamens at jkamens@bna.com