Margaret E. Tahyar and Joseph A. Hall are Partners and Davi…

Margaret E. Tahyar and Joseph A. Hall are Partners and David A. Zilberberg is a Counsel at Davis Polk & Wardwell LLP. This post is based on a Davis Polk memorandum by Ms. Tahyar, Mr. Hall, Mr. Zilberberg, Loyti Cheng, Paul D. Marquardt, and Mario Verdolini.
Introduction
The 2023−2024 Supreme Court term continued a strong rebalancing of power among the courts, the administrative state and, if it pays attention, Congress. This rebalancing will impact how executive branch and independent agencies engage in rulemaking, issue guidance and engage in enforcement. Courts will exercise more independent judgment and look more critically at agency actions. Nonetheless, agencies continue to have significant power, authority and discretion. We do not believe that the rebalancing will result in an immediate seismic shift in the administrative state as predicted by some media commentators. When Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. was decided in 1984, it took years for its implications of strong deference to administrative agencies to be widely understood. Similarly, it will take years to understand the full import of the new status quo. We expect an uptick in litigation, rather than a “blitzkrieg” or “tsunami.” We agree with those commentators who have observed that litigation challenging agency actions will not be brought solely by regulated entities, but also stakeholders that favor greater regulation. Future litigation will not necessarily favor one set of interests over another. This update briefs on the main themes in the new status quo and what it means for the future.
Nondelegation not taken up
A change that did not occur has been ignored by most commentators. One of the most sweeping proposed theories for limiting the power of the administrative state is the expansion of the nondelegation doctrine, which has been pushed by some legal scholars. The nondelegation doctrine recognizes that, under the Constitution, Congress cannot delegate its legislative powers to the executive branch or independent agencies, unless it supplies an “intelligible principle” to guide the exercise of such power. The nondelegation doctrine has not frequently been used by courts in recent history and the Supreme Court this term declined to take it up despite opportunities to do so.
The Supreme Court had the opportunity to address nondelegation in SEC v. Jarkesy, given that the Fifth Circuit held that “Congress had violated the nondelegation doctrine by authorizing the SEC, without adequate guidance, to choose whether to litigate this action in an Article III court or to adjudicate the matter itself.”1 Nevertheless, because the Supreme Court held that the Seventh Amendment required a jury trial in an Article III court for issues related to common law fraud, it declined to reach the issue, leaving the Fifth Circuit’s nondelegation holding intact.
As for Loper Bright Enterprises v. Raimondo and its companion case, Relentless v. Department of Commerce, even though the petitioners alluded to the nondelegation doctrine in their brief,2 the Supreme Court did not reach the issue. The Supreme Court noted that Congress can permissibly delegate authority to agencies, while also noting that it must do so in a constitutional manner. The Court stated, “[w]hen the best reading of a statute is that it delegates discretionary authority to an agency,” the reviewing court “fulfills [its role under the APA] by recognizing constitutional delegations, ‘fix[ing] the boundaries of [the] delegated authority,’ and ensuring the agency has engaged in ‘reasoned decisionmaking’ within those boundaries.”3 The Supreme Court clarified that in the absence of Chevron, “when a particular statute delegates authority to an agency consistent with constitutional limits, courts must respect the delegation.”4 It remains to be seen whether the Supreme Court will weigh in on – or continue to sidestep – the nondelegation doctrine in a future term, but the references in the Loper Bright opinion to “constitutional limits” of delegation and statements from concurring and dissenting opinions in other cases5 suggest that the Court’s interest may be turning to the constitutional scope of permissible delegation.
The new status quo
There are a number of themes that emerge from these recent Supreme Court decisions, which demonstrate the rebalancing of power:
- Textualism and fixed original intent. A majority of the Supreme Court continues to favor tight textual analysis, including careful examination of the structure of statutes, and is skeptical when agencies give new meaning to older statutes, instead viewing statutes as having a “single, best meaning” that is “fixed at the time of enactment.”6 For example, in NFIB v. OSHA, regarding the 2022 vaccine mandate, the Supreme Court majority considered the statutory text and absence of interpretive support from the legislative and agency history to conclude that OSHA’s vaccine mandate exceeded its authority to set workp…