metamitya ·
The Supreme Court is at war with the “administrative state.” In three major cases decided at the end of the Supreme Court’s last term, the Court decided against the administrative state, reducing the powers of administrative agencies. “Chevron deference” to agency interpretations in areas of their expertise was eliminated. The “public rights” exception to a target’s right to a jury trial in an action brought by an agency was redefined and limited. The statute of limitations to challenge agency rulemaking was extended to permit a new entity to challenge decades-old rules. Collectively, these decisions shift power away from the agencies (and in some cases Congress), transferring that power to the Courts. Decades-old precedents were swept aside to shift the balance of power in Washington. The implications of these decisions extend to all federal agencies.
What is the fuss about? As the concurrence in Cochran v. SEC1 argued, democracy itself is at issue:
Woodrow Wilson. . . argued that universal suffrage would make the three branches of government ignorant, indolent, and incapable of regulating modern affairs. Wilson’s solution? He wanted administrative agencies to operate in a separate, anti-constitutional, and antidemocratic space — free from pesky things like law and an increasingly diverse electorate. One of Wilson’s acolytes, James Landis, was the SEC’s founding father. . . . Landis hoped that the SEC could set upon Americans without interference from courts—unless and until the SEC gave courts permission to review its work. That is obviously not how our government is supposed to work. And in the Landisonian view, that’s precisely the point.2
A contrary view was presented by Justice Elena Kagan in her dissent in Seila Law LLC v. Consumer Financial Protection Bureau,3 where she argues that a flexible approach to administrative law is necessary to create a working government:
In second-guessing the political branches, the majority second-guesses as well the wisdom of the Framers and the judgment of history. It writes in rules to the Constitution that the drafters knew well enough not to put there. It repudiates the lessons of American experience, from the 18th century to the present day. And it commits the Nation to a static version of governance, incapable of responding to new conditions and challenges. Congress and the President established the CFPB to address financial practices that had brought on a devastating recession, and could do so again. Today’s decision wipes out a feature of that agency its creators thought fundamental to its mission — a measure of independence from political pressure.4
This advisory examines the implications of the Supreme Court’s decisions in Loper Bright Enterprises v. Raimondo,5 SEC v. Jarkesy,6 and Corner Post, Inc. v. Board of Governors of the Federal Reserve System.7
Loper Bright Enterprises v. Raimondo
Background. In the 1984 case Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.,8 the Supreme Court created a doctrine known as Chevron deference, which generally required courts to defer to an administrative agency’s interpretation of an ambiguous statute so long as the agency’s interpretation was reasonable.
Congress cannot anticipate every situation that an agency faces, so it sometimes directs agencies to act in the public interest (or some other broad directive) or provides statutory commands which could be interpreted in several ways. As a result of these Congressional enactments, Chevron deference has been used as a defense for thousands of rulemakings by agencies covering numerous sectors, from environmental protection to financial regulation. As discussed below, the scope of Chevron deference has been changed throughout its history.
In 2022, the Supreme Court’s decision in West Virginia v. Environmental Protection Agency9 created a limit on Chevron deference in the form of the Major Questions Doctrine. The Major Questions Doctrine provides that courts will presume Congress does not delegate issues of major political or economic significance to administrative agencies without a clear statement to that effect.
Loper Bright Factual and Procedural Summary. To address overfishing concerns by unregulated foreign vessels off the US coasts, Congress enacted the Magnuson-Stevens Fishery Conservation and Management Act (MSA). Under a delegation of authority from the Secretary of Commerce, the National Marine Fisheries Service (NMFS) administers the MSA. The MSA established councils that develop fishery management plans, which the NMFS approves and promulgates as final rules. Of relevance, a plan may require that “one or more observers be carried on board” domestic vessels “for the purpose of collecting data necessary for the conservation and management of the fishery.”
At issue in this case, brought by petitioners Loper Bright Enterprises and others, was a rule promulgated by NMFS that could require a fishing vessel to contract with and pay for a government-ce…