Fifth Circuit declines to apply Chevron deference in bump stock ruling

The Checks and Balances Letter delivers news and information from Ballotpedia’s Administrative State Project, including pivotal actions at the federal and state levels related to the separation of powers, due process, and the rule of law.

This edition: 

In this month’s edition of Checks and Balances, we review a decision from the U.S. Court of Appeals for the Fifth Circuit in which the en banc court declined to apply Chevron deference to the Bureau of Alcohol, Tobacco, Firearms and Explosives’ (ATF) interpretation of its statutory authority to issue a bump stock ban; the introduction of the Regulations from the Executive in Need of Scrutiny (REINS) Act in the 118th Congress; a district court ruling affirming President Biden’s authority to raise the federal contractor minimum wage; and new recommendations from the Administrative Conference of the United States (ACUS) aimed at improving federal regulatory procedures.

At the state level, we take a look at the Ohio Supreme Court’s decision to limit Chevron deference in the state; a new state office in Ohio tasked with what lawmakers view as monitoring federal overreach; and a moratorium on new agency rulemaking in Iowa.

We also highlight legal commentary seeking clarity from the U.S. Supreme Court on appropriate applications of Chevron deference by the federal courts. This month, we wrap up with our year-end Regulatory Tally, which features information about the 2,044 proposed rules and 3,168 final rules added to the Federal Register in 2022 and OIRA’s regulatory review activity.

In Washington

Fifth Circuit declines to apply Chevron deference in bump stock ruling

What’s the story?

The U.S. Fifth Circuit Court of Appeals ruled 13-3 on January 6, 2023, that the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) exceeded its statutory authority when it adopted a rule banning bump stock devices. Since the rule implemented criminal penalties for those found in violation, the court departed from prior appellate court reasoning on the issue and declined to apply Chevron deference to the agency’s changed interpretation of the underlying statutes. 

Following guidance issued by President Donald Trump (R) in 2018, the ATF changed its interpretation of the Gun Control Act and the National Firearms Act to find that bump stocks qualify as machine guns and can therefore be prohibited. Gun owners and organizations challenged the rule, arguing in multiple lawsuits that the agency lacked the authority under federal law to issue the rule. Three appellate courts upheld the ban and the U.S. Supreme Court declined to reconsider the decisions—leaving in place a district court ruling that applied Chevron deference to the ATF’s changed interpretation of the law.

After a three-judge panel of the Fifth Circuit upheld the ban in December 2019, the en banc court voted to enjoin the ATF rule. The majority concluded in part that the imposition of criminal penalties by a federal agency prompts the rule of lenity to supersede Chevron deference. Judge Jennifer Elrod, writing for the majority, argued that “Chevron deference shifts the responsibility for lawmaking from the Congress to the executive, at least in part. That tradeoff cannot be justified for criminal statutes, in which the public’s entitlement to clarity in the law is at its highest.”

The resulting circuit split could lead the U.S. Supreme Court to take up the case and resolve the question. The ATF had not commented on the ruling as of January 19, 2023. 

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REINS Act reintroduced in 118th Congress

What’s the story?

Congresswoman Kat Cammack (R-Fla.) on January 11, 2023, reintroduced the Regulations from the Executive in Need of Scrutiny Act (REINS Act) in the 118th Congress. Filed as H.R. 277 with more than 170 Republican cosponsors, the REINS Act would require Congress to approve new major rules proposed by executive branch agencies before they can be enforced. 

The REINS Act is a proposal designed to amend the Congressional Review Act (CRA) of 1996. Under the CRA, Congress has the authority to issue resolutions of disapproval to block new agency regulations. The REINS Act would broaden the CRA to not only allow Congress to issue resolutions of disapproval, but to also require congressional approval of major agency regulations (those with an economic impact of $100 million or more, among other considerations) before those regulations take effect.

Republican lawmakers have introduced the REINS Act during every session of Congress since the 112th Congress (2011-2012).

Wisconsin implemented the REINS Act at the state level in 2017. Florida enacted legislation with provisions similar to the REINS Act in 2010.

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District judge upholds president’s authority to increase federal contractor minimum wage

What’s the story?

Judge John J. Tuchi of the U.S. District Court for the District of Arizona on January 6, 2023, rejected a challenge from a coalition of states and held in State of Arizona v. Walsh that President Joe Biden (D) did not exceed his authority when he issued an executive order directing the U.S. Department of Labor (DOL) to promulgate regulations increasing in the minimum wage for federal contractors.

President Biden issued Executive Order (EO) 14026 in April 2021 requiring the DOL to issue regulations increasing the minimum wage for federal contractors to $15 an hour. Five states (Arizona, Indiana, Idaho, Nebraska, and South Carolina) in February 2022 challenged the order in the U.S. District Court for the District of Arizona, arguing in part that the executive order violated the clear notice requirement of the U.S. Constitution’s spending clause because states were not fully aware of the new contracting conditions under the order; that the order exceeded the president’s authority under the Federal Property and Administrative Services Act of 1949 (FPASA); and that the FPASA unconstitutionally delegates congressional authority to the president in violation of the nondelegation doctrine.

Judge Tuchi ruled in part that the executive order, in his view, did not violate the U.S. Constitution’s spending clause because the clause is not applicable to federal contracts; that the order did not exceed the president’s statutory authority under the FPASA because the order speaks to the FPASA’s federal contracting goals; and that the FPASA does not violate the nondelegation doctrine because it provides the president with an intelligible principle to guide executive action.

The states can appeal the case to the United States Court of Appeals for the Ninth Circuit, but no appeal had been filed as of January 12, 2023.

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ACUS adopts recommendations on federal regulatory procedures

What’s the story?

The Administrative Conference of the United States (ACUS), an independent federal agency tasked with recommending procedural improvements for federal regulatory processes, adopted three recommendations during the 78th Plenary Session in December 2022 aimed at what the organization views as improving “the efficiency, transparency, and fairness of administrative programs.”

The recommendations, published in the Federal Register on January 13, 2023, put forth what ACUS considers to be best practices regarding precedential decision-making in agency adjudication, the use and availability of regulatory enforcement manuals, and public accessibility to settlement agreements made during agency enforcement proceedings.

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In the states

Ohio Supreme Court limits Chevron deference

What’s the story? 

The Ohio Supreme Court on December 29, 2022, ruled against applications of Chevron deference in the state. In TWISM Ents., L.L.C. v. State Bd. of Registration for Professional Engineers & Surveyors, the court found that state courts do not need to defer to state agency interpretations of the law—a deference doctrine known as Chevron deference at the federal level. 

​​Lower courts in TWISM deferred to the Ohio Board of Registration for Professional Engineers and Surveyors’ interpretation of its engineering certification rules, which denied TWISM Enterprises’ application to provide professional engineering services because the company’s designated licensed engineer was an independent contractor rather than an employee. TWISM Enterprises appealed the decision to the Ohio Supreme Court, arguing that the agency’s interpretation of the governing statute was flawed because the law does not specify that the licensed engineer must be an employee of the business.

Justice Patrick DeWine (with Justices Sharon L. Kennedy, Patrick F. Fischer, and Michael P. Donnelly concurring) disagreed with the agency’s interpretation of the statute and argued that the judicial branch has the authority to determine whether the statutory interpretations of state agencies are lawful. DeWine, writing for the court, argued “that it is the role of the judiciary, not administrative agencies, to make the ultimate determination about what the law means. Thus, the judicial branch is never required to defer to an agency’s interpretation of the law.” DeWine added that “an agency interpretation is simply one consideration a court may sometimes take into account in rendering the court’s own independent judgment as to what the law is.”

Justices Maureen O’Connor, Melody Stewart, and Jennifer Brunner concurred in the judgment only. 

Ohio joins 13 other states identified by Ballotpedia that have limited judicial deference practices through either legislation, court rulings, or voter-approved initiatives.

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Ohio law creates state office to monitor potential federal overreach

What’s the story? 

Ohio Gov. Mike DeWine (R) on January 3, 2023, signed a law establishing a Tenth Amendment Center in the Ohio Solicitor General’s Office aimed at monitoring “federal executive orders, federal statutes, and federal regulations for potential abuse or overreach, including assertion of power inconsistent with the United States Constitution,” according to the text.

The center is tasked with reporting to the state solicitor general any federal actions that, in the center’s view, encroach on the powers of the state. The solicitor general must then advise the state attorney general on further action.

Ohio Attorney General Dave Yost (R) said he supported the legislation and that he believed the law would allow the state to better check federal action and preserve the principle of federalism.

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Iowa governor calls for rulemaking pause, regulatory review

What’s the story? 

Iowa Governor Kim Reynolds (R) on January 10, 2023, signed an executive order that placed a moratorium on new state agency rulemaking and directed state agencies to conduct a comprehensive review of all administrative regulations.

“Iowa’s Administrative Code contains over 20,000 pages and 190,000 restrictive terms, putting undue burden on Iowans and the state’s economy, increasing costs for employers, slowing job growth, and impacting private sector investments,” stated Reynolds in a press release. “In Iowa, we’re taking a commonsense approach that gets government out of the way and leads to a more robust economy in every community.” 

The moratorium on new rulemaking (with certain exceptions) takes effect on February 1 and extends through the review period for existing regulations determined by the state’s Administrative Rules Coordinator (ARC). Following the review process, state agencies seeking to renew existing rules must re-promulgate them through the rulemaking process outlined in the state’s Administrative Procedure Act.

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Seeking clarity on Chevron deference

In recent commentary for the Yale Journal on Regulation’s Notice and Comment blog, Cato Institute attorney Isaiah McKinney argued that the U.S. Supreme Court’s approach to Chevron deference through the application of statutory tools of construction has left lower courts without clear guidance on when to apply the doctrine, resulting in inconsistent approaches to Chevron deference across the federal courts.

“The Supreme Court rigorously applies the canons of statutory construction, finding ambiguity only when it has truly exhausted those canons. That rigorous approach is itself precedential and binding on the lower courts. But the Supreme Court’s lack of specific guidelines on how to determine whether a statute is ambiguous and how far lower courts must push the canons have unfortunately left the lower courts with little to work with, leading to this discrepancy in the outcomes of Chevron cases.

“This discrepancy is itself a problem. If the Supreme Court does not overrule Chevron, it should at least provide clarity on when to find ambiguity. As then-Judge Kavanaugh urged, rather than quickly resorting to finding ambiguity, courts should ‘find the best reading of the statute by interpreting the words of the statute, taking account of the context of the whole statute, and applying any appropriate semantic canons.’”

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  • Click here to read the full text of “At the Supreme Court, Chevron Deference Has Morphed into the Application of the Tools of Construction,” by Isaiah McKinney

Regulatory tally

Federal Register

Office of Information and Regulatory Affairs (OIRA)

OIRA’s 2022 regulatory review activity included the following actions:

  • Review of 485 significant regulatory actions. 
  • Forty rules approved without changes; recommended changes to 415 proposed rules; 24 rules withdrawn from the review process; five rules subject to a statutory or judicial deadline.
  • As of January 3, 2023, OIRA’s website listed 100 regulatory actions under review.
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