Chevron key to effective regulation and solving the aff

Freeman, Jody (Jody Freeman is the Archibald Cox Professor of Law at Harvard Law School and founder of the Harvard Environmental and Energy Law Program. She previously served as counselor for energy and climate change in the Obama White House.) 06-12-2024 // PH

The U.S. Supreme Court today issued its , overruling the Court’s seminal case on administrative agency deference, Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc. Chief Justice Roberts delivered the opinion of the Court and Justices Kagan, Sotomayor and Jackson dissented. In the 1984 ruling in ., the Court held that a court “may not substitute its own construction of a statutory provision for a reasonable interpretation made by [the agency charged with administering the statute],” where the statute is ambiguous. The decision established a two-step test in which a court must first “assess whether the statutory language is ‘clear’ and, if so, give effect to the clear terms” and “if the statutory language is ‘silent or ambiguous,’ then—at step two—a court is prohibited from resolving the legal question itself as it would in any other case, and instead must defer to the agency’s interpretation.” But today’s opinion held that “courts may not defer to an agency interpretation of the law simply because a statute is ambiguous,” thereby definitively overruling Chevron. The ruling is not a surprise. In January of this year, in the two cases that were granted challenging Chevron saw conservative justices’ questioning leaning largely in favor of scrapping the doctrine, while Justices Kagan, Sotomayor and Jackson pushed back on the petitioners’ arguments, predicting chaos, and the U.S. Solicitor General said overruling such a foundational doctrine would result in “endless litigation.” A group of herring fishermen first the High Court in November 2022 asking the Court to consider: 1) whether the Magnuson-Stevens Act (MSA), which governs fishery management in federal waters and says that the National Marine Fisheries Service (NMFS) can require vessels to carry federal observers onboard to enforce the agency’s regulations, also authorizes the NMFS to require that the vessels pay the salaries of those monitors; and 2) whether the Court should overrule Chevron. The Court ultimately granted the petition limited to question 2. The fishermen argued in their opening brief that ever since the Chevron decision, “judges, litigants, and scholars have struggled not only to apply Chevron, but to reconcile it with the Constitution, the Administrative Procedure Act (APA), and the historical record.” While it is on the books, the brief argued, administrative agencies will continue to abuse their power. Then, in October 2023, the Court challenging Chevron, explaining that it would hear in tandem with the Loper Bright case, since the two were almost identical. About 60 amicus briefs were filed in the Loper Bright case. In one filed by Patent and Trademark Attorneys, Agents, and Applicants for Restoration and Maintenance of Integrity in Government (PTAAARMIGAN) and US Inventor in support of neither party, the amici asked the Court to reaffirm Chevron deference but to clarify that it should only apply “when an agency acts within the substantive and procedural limits set by Congress.” The brief argued that the U.S. Patent and Trademark Office (USPTO) often “promulgates regulations without the public participation and vetting required by the Administrative Procedure Act, Paperwork Reduction Act, 44 U.S.C. § 3501 et seq., and Regulatory Flexibility Act, 5 U.S.C. § 601 et seq.” Furthermore, when the Office has been challenged in the past on such moves, the agency uses Chevron as a cover, it said. “The USPTO’s neglect of rulemaking procedure leads to regulatory costs that exceed $ 1 billion per year,” added the brief, citing by the brief’s author, David Boundy of Potomac Law Group. Today’s opinion said that Chevron has not been the kind of stable rule required for courts to say what the law is but instead called it an “impediment” and “a judicial invention that required judges to disregard their statutory duties.” The Court said that the doctrine cannot be squared with the Administrative Procedures Act (APA), which “specifies that courts, not agencies, will decide ‘all relevant questions of law’ arising on review of agency action, §706 (emphasis added)—even those involving ambiguous laws—and set aside any such action inconsistent with the law as they interpret it.” In a concurring opinion written “to address why the proper application of the doctrine of stare decisis supports that course,” Justice Gorsuch said “[t]oday, the Court places a tombstone on Chevron no one can miss.” In her dissent, Justice Kagan said the majority’s opinion “flips the script,” and that now a “rule of judicial humility gives way to a rule of judicial hubris.” IPWatchdog Founder and CEO said that Chevron was a “recipe for disaster” and that overruling it was the right move, but it is far from a sure thing that anything will change going forward. He explained: “As reasonable as the premise behind Chevron once was— namely to give front line agencies latitude to carry forward their mission— experience has demonstrated that agencies often abuse authority and seek to claim every opportunity to do whatever they wanted to do regardless of what Congress, the Judiciary, and basic concepts of checks and balances. In a nutshell, Chevron allowed agencies to fill the void abdicated by Congress and a Judiciary all too willing to refuse to engage in oversight. This was a recipe for disaster because too many agencies are controlled by political operatives and believers who are willing to allow the ends to justify the means, and willing to take every opportunity to expand their own power. Ultimately, Chevron provided cover for truly arbitrary and capricious decisions. The Administrative State will likely not go quietly into the night, so as important as this decision can be, the real question will be whether anything changes at all. If things do change as envisioned by this decision, much more will be required of Congress and the courts, and the petty political in-fighting and refusal to accomplish anything out of a fear of a primary challenger will need to be curtailed.” In terms of how the decision might affect IP owners in the near term, of Sterne Kessler said it could impact the USPTO’s decision to pursue the recently-issues Notice of Proposed Rulemaking (NPRM) on terminal disclaimer practice: ” “One concrete implication is that the PTO will not be able to rely on Chevron to justify the proposed rulemaking regarding terminal disclaimer practice,” Milliken said. “That rule has generated some controversy and may well be challenged if and when it is put into place. So, Loper does change the landscape of that potential dispute in a significant way.” As far as the impact of the decision on the cases at hand, Meredith Moore, Director of Ocean Conservancy’s Fish Conservation Program, issued the following statement: “Today, the Supreme Court clearly showed that this case was never just about fish. Instead, New England’s Atlantic herring fishery was used as a Trojan Horse to attack the foundations of good governance and resource management. The protections that keep our air and water clean, our homes and workplaces safe, and our communities, our children and ourselves healthy rely on the knowledge and experience of scientists and experts, and all that is now at risk. “Decades ago, American fisheries were on the brink of collapse, and what made recovery possible – what kept fishing communities in business and seafood on American dining room tables – was strong science-based management decisions rooted in data. This case jeopardizes our access to critical information about America’s fisheries, which is the exact opposite of what we need to handle the fast-growing impacts of climate change. “The Supreme Court’s decision opens the floodgates to litigation that will erode critical protections for people and the environment.”

What will it mean for policymaking on environmental and other issues, practically speaking, if the U.S. Supreme Court jettisons the Chevron doctrine?

This question is on the minds of legal observers and environmental advocates as they wait for the justices to decide two consolidated cases in which the court has been asked to overrule the famous precedent that has stood for four decades. That ruling, in the 1984 case Chevron v. National Resources Defense Council, says that where Congress has not expressed itself clearly, leaving gaps or ambiguities in federal statutes, agencies should be allowed to adopt the interpretation they prefer, so long as that interpretation is reasonable.

The cases now before the Supreme Court — Loper Bright Enterprises v. Raimondo and Relentless Inc. v. Department of Commerce — were brought by commercial fishing groups challenging a National Marine Fisheries Service rule, and a decision is expected in the coming weeks. If the court decides to scrap the Chevron doctrine, it could have major implications for environmental policymaking and regulation on issues ranging from air pollution and climate change to clean water rules, public lands management, endangered species protection, and more.

Overturning Chevron would reduce government’s ability to respond to new scientific findings and technological developments.

There are two very different perspectives on the Chevron doctrine, which largely determine whether one thinks it ought to be overruled. Critics say that Chevron gives policymaking discretion to unaccountable agency bureaucrats, allows presidents to abuse their executive authority, and encourages members of Congress to shirk their legislative responsibilities. They charge that Chevron is “reliance-destroying” because it allows policy “flip-flops” between administrations and that it cannot be squared with the landmark Marbury v. Madison decision, which ruled that courts “say what the law is” and established the principle of judicial review. If one believes that there is always a single best answer to how to interpret a given statutory provision, and that a skilled enough legal interpreter can always produce that best answer, then overturning Chevron has some intuitive appeal. Why ever defer to an agency when judges can just decide?

Supporters of Chevron contest each of these claims. Congress inevitably leaves certain interpretive questions unresolved, they say, which means that some statutory provisions are capable of different understandings. And democratically elected presidents charged with executing the law are entitled to use this ambiguity to advance their policy preferences. (This is otherwise known as the “elections have consequences” argument.) They would note that agencies are amply accountable to multiple overseers and restricted by many legal, political, and institutional constraints. And they would reject the idea that Chevron is somehow responsible for legislative shirking or gridlock and point to House and Senate rules that make passing legislation exceedingly difficult, along with hyper-partisanship. While accepting that judicial review is legitimate and necessary, they would also say that nothing in the Constitution requires courts to decide all legal questions with no deference to expert regulators.

To the claim that there is one discernible “best” answer to every hard question of statutory interpretation, they would say no, sometimes Congress has not been clear (whether because political compromise requires some degree of unclarity; or because Congress is not prescient; or intentionally wishes to leave agencies room to adapt to change; or because of the limits of language), and there is more than one arguably best answer. From this point of view, Chevron is a sensible default rule of decision. It keeps courts from substituting their judgments for an agency’s — and that is how it should be, since the agency charged with day-to-day implementation will better know what is reasonable in the run-of-the-mill case.

I support the defense of Chevron, as my past writings have made clear. Overturning or enfeebling Chevron would have negative consequences. It would further concentrate power in the judiciary; reduce the government’s ability to respond to new scientific findings and technological developments, as well as to social and economic change; sow disruption and disorder in the lower courts; and undermine the regulatory stability on which the normal course of business depends. For example, courts rather than agencies would decide what pollution standards are “requisite to protect the public health” and allow for an “adequate margin of safety,” as the Environmental Protection Agency is mandated to do; what it means for an upwind state to “contribute significantly” to the failure of downwind states to meet national air quality standards under the Clean Air Act; and whether “harm” to an endangered species is limited to direct applications of force or can include habitat destruction.

If Chevron is abandoned, agencies will have to defend every interpretive choice as the single best way to read a statute.

First, overturning Chevron would shift substantial power to the judiciary to have the last word on many important questions of policy that arise under federal law. It is more democratic for interpretive decisions, which inevitably involve policy discretion, to be made by agencies — which are part of an executive branch headed by an elected president, and subject to ongoing oversight by Congress — rather than by unelected judges. Deciding what qualifies as the “best system of emission reduction” or whether implementing an offshore drilling plan would “probably cause serious harm or damage… to the marine, coastal or human environment” — as the Secretary of the Interior is authorized to do — depends on a combination of legal, factual, and policy determinations. Agencies have research- and information-gathering capacity, and relevant expertise in areas of regulatory complexity, that courts do not possess. They are also required to solicit, consider, and respond to comments on their regulatory proposals from industry and other stakeholders, including states. Companies and their trade associations can and do weigh in through this process to shape rules that affect them, and to require agencies to explain themselves.

Some of the conservative justices have implied that overturning Chevron is necessary to protect congressional prerogatives and restore Congress to its rightful role in our separation of powers scheme. Yet Congress already has the means to constrain agency overreach and check the president’s executive power. Under the Congressional Review Act, Congress has required agencies to provide advance notice of their rules and can effectively cancel any rule before it takes legal effect through a fast-track, filibuster-proof process requiring only a majority vote. Congress can also make its wishes known in the annual appropriations process and can defund agency initiatives of which it disapproves. If anything, abandoning Chevron would make the presumed separation of powers imbalance worse, not better — Congress could still use vague language to avoid making hard policy choices, only now those policy choices would be made by courts.

Second, without Chevron, it will be harder for agencies to adapt regulation to new circumstances, something we should want government to do. Under Chevron, agencies can consider the latest scientific advances and technology developments; re-examine costs and benefits; consult with stakeholders; and consider the president’s policy preferences too, knowing that the next administration may adopt a different view — in which case the agency would then bear the burden of explaining to the public and the courts why that new understanding is also reasonable. But without Chevron, agencies will have to defend every interpretive choice as the single best way to read the statute, not only now but for all time, making it more difficult for a later administration to change its mind given new information or unforeseen conditions. Eliminating flexibility will not improve regulation. It will rigidify it and prevent the government from updating policy over time.

Agency officials are more expert in regulatory implementation and more politically accountable than are federal judges.

Third, overturning Chevron is likely to inspire more litigation and instability in the lower courts. Releasing all federal judges from any obligation to defer to agencies will invite parties to challenge many more rules — not just the most significant ones — and relitigate thousands of interpretations that courts have already settled. Justice Amy Coney Barrett raised this concern at oral argument, when she suggested that a flood of litigation might ensue over long-standing interpretations, where courts already determined that Congress was not clear and deferred to agencies.

Overturning Chevron will also undermine uniformity and consistency in the interpretation of federal law. Chevron is a familiar and useful tool for lower court judges — they understand and know how to use its framework. What might replace it? The most likely standard of review the Supreme Court would substitute is so-called Skidmore deference, which is the amount of deference an agency is due in the estimation of the reviewing court based on several considerations — a standard that provides lower courts little guidance and maximum flexibility. As Justice Elena Kagan said at oral argument, “Skidmore has always meant nothing.” Without Chevron, judges will wade into often unfamiliar and technically complex statutes armed with their dictionaries, textualist principles, and canons of construction. They may or may not give any respect to the agency’s views. This situation cannot help but increase conflicts among the lower courts.

This prospect leads to a fourth and related point, which is that overturning Chevron is likely to be bad for business. Of course, many conservative opponents of regulation believe that Chevron enables more regulation on balance, so they would like to see it gone. But there is a decent possibility that the consequences for business will be, at best, mixed. A few high-profile politically controversial rules will always wind up in the Supreme Court. And for those, Chevron will hardly matter because the Court will simply decide, as it has shown a tendency to do. But overall, Chevron is a stabilizing force because of its effect on lower courts. Without Chevron’s default presumption in favor of government, it will be more tempting for many would-be litigants — domestic and foreign companies, state attorneys general, public interest groups, other stakeholders — to challenge agency rules, even those that many, if not most, companies might be able to live with or which they might at least prefer to uncertainty. Unleashing a cacophony of inconsistent rulings on what various statutory provisions mean, issued by up to 850 federal judges with minimal expertise in technical areas undermines the stable conditions necessary for the private sector to thrive.

The Supreme Court may not overturn Chevron after all, perhaps in part because of some of these considerations. It may limit its application to narrow circumstances or impose new threshold tests on when it can apply. But it is highly unlikely simply to reaffirm it, which would be the best outcome for democracy, good governance, and business.

At bottom, Chevron embodies an inclination — that federal agencies ought to be given the benefit of the doubt if they offer good reasons for interpreting a statute a particular way, when no one can say for sure what Congress would have wanted to do. That inclination depends on a belief that agency officials are both more expert in regulatory implementation and more politically accountable than are federal judges, so that in such instances, agencies ought to be trusted to make the call. Coming to that conclusion requires judges to at least consider that there may be limits to their prowess and to allow that when it comes to complex regulatory statutes, where legal meaning and policy discretion are often intertwined, agencies can be legitimate legal interpreters. That attitude represents a certain faith in the capacity and competence of government that it would be a terrible shame to lose