SCOTUS takes up Chevron

By

Chris Nelson

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 the United States Supreme Court’s decision to take up a case challenging Chevron deference, and its ruling in a separate case allowing for Article III challenges to agency structure; the inclusion of the Regulations from the Executive in Need of Scrutiny (REINS) Act in the federal debt ceiling resolution; President Joe Biden’s third veto of a Congressional Review Act (CRA) resolution; and new legislation from U.S. Senator Ted Cruz (R) aiming to eliminate the Consumer Finance Protection Bureau (CFPB).

At the state level, we take a look at a new Idaho law modifying the legislative review process for state administrative rules. We also examine legislation passed by the Arizona lawmakers that, unless vetoed by the governor, would enact a state law similar to the federal REINS Act.

We also highlight new scholarship from administrative law scholars Brianne Gorod, Brian Frazelle, and Alex Rowell examining the scope of the major questions doctrine. We wrap up with our Regulatory Tally, which features information about the 183 proposed rules and 240 final rules added to the Federal Register in April and OIRA’s regulatory review activity.

In Washington

SCOTUS takes up Chevron, greenlights challenges to agency structure

What’s the story?

The U.S. Supreme Court on May 1, 2023, agreed to hear Loper Bright Enterprises v. Raimondo—a case challenging an agency interpretation of a federal fishery law that could curb or clarify future applications of Chevron deference by the federal courts.

Inconsistent applications of Chevron deference, including by the U.S. Supreme Court, have led scholars and judicial commentators to raise questions about the doctrine’s longevity and anticipate rulings limiting its scope. Similar questions about potential limits to Chevron deference surround Loper in light of the court’s grant of review, which concerns whether the court should overturn Chevron deference or, at a minimum, clarify when certain instances of statutory silence constitute the type of ambiguity that would compel deference.

Two weeks earlier, on April 14, 2023, the court issued a unanimous decision in Axon Enterprise Inc. v. Federal Trade Commission (FTC)—consolidated with Cochran v. Securities and Exchange Commission (SEC)—holding that plaintiffs can bring constitutional challenges to the structure of the FTC and the SEC in federal courts without first going through administrative proceedings.

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REINS Act included in debt ceiling bill

What’s the story?

The U.S. House of Representatives on April 26, 2023, voted 219-210 to pass H.R. 2811, the Limit, Save, Grow Act of 2023, which aims to raise the federal government’s debt ceiling and includes provisions related to congressional review of agency rulemaking known as the Regulations from the Executive in Need of Scrutiny (REINS) Act.

The REINS Act would require congressional approval of certain major agency regulations before the rules could take effect. The REINS Act defines major agency regulations as those that have financial impacts on the U.S. economy of $100 million or more, increase consumer prices, or have significant harmful effects on the economy. Republican lawmakers have introduced the REINS Act during every session of Congress since the 112th Congress (2011-2012).

Congresswoman Kat Cammack (R-Fla.) introduced the REINS Act in the 118th Congress with more than 170 Republican cosponsors. Republican lawmakers have introduced the REINS Act during every session of Congress since the 112th Congress (2011-2012). Florida and Wisconsin lawmakers enacted REINS-style state laws in 2010 and 2017, respectively.

President Biden has stated that he will veto the Limit, Save, Grow Act if it reaches his desk. White House Press Secretary Karine Jean-Pierre stated in January, “Congress is going to need to raise the debt limit without—without—conditions and it’s just that simple,” according to ABC News.

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Biden vetoes third CRA resolution

What’s the story?

President Joe Biden (D) issued his third veto of a Congressional Review Act (CRA) resolution on May 16, 2023. The resolution, which gained bipartisan support in both the House and Senate, aimed to nullify a rule from the International Trade Administration that paused tariffs on solar equipment imports from Cambodia, Malaysia, Thailand, and Vietnam. 

Lawmakers in support of the resolution argued in part that the rule limits growth in domestic solar manufacturing, allows China to circumvent tariffs by directing its solar panels through other countries, and fails to align with U.S. trade policies. Biden disagreed in his veto message, arguing that the CRA resolution “bets against American innovation. It would undermine these efforts and create deep uncertainty for American businesses and workers in the solar industry.”

CRA resolutions pending in Congress as of May 19, 2023, aim to rescind, among others, the following selected agency rules:

  • A rule from the U.S. Department of Labor regarding wage rates for agricultural labor performed by certain temporary workers that, according to Representative Ralph Norman (R-S.C.) and Senator Tim Scott (R-S.C), will increase labor and food costs.
  • A rule from the Environmental Protection Agency instituting Endangered Species Act (ESA) protections for the lesser prairie chicken that, according to Senator Joe Manchin (D-W.Va.), will “cause serious damage to our national agricultural economy and hinder critical oil and gas projects in favor of a radical environmental agenda.”
  • A student loan cancellation rule from the U.S. Department of Education that Representative Bob Good (R-Va.) argued “shifts the costs from student loan borrowers onto the backs of taxpayers to the tune of hundreds of billions of dollars.”
  • A rule from the National Marine Fisheries Service aiming to modify the definition of ‘habitat’ for endangered species designations that Senator Cynthia Lummis (R-Wyo.) argued would politicize endangered species decision-making and unfairly target landowners. 

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Cruz files bill to eliminate CFPB

U.S. Senator Ted Cruz (R-Texas) and Representative Byron Donalds (R-Fla) on April 27, 2023, introduced the Repeal Consumer Financial Protection Bureau (CFPB) Act, which would eliminate the CFPB by repealing the CFPB Act and restoring federal law “as if the Act had not been enacted,” according to the text.

The CFPB, established as an independent agency in 2010 and championed by U.S. Senator Elizabeth Warren (D-Mass.), seeks to enforce federal consumer financial law and ensure what the agency views as fairness in the market for consumer protection products. 

Cruz argued in a statement that the CFPB serves to “stifle economic growth by enforcing burdensome, unnecessary economic regulations.”

The U.S. Supreme Court this fall will hear oral argument in Consumer Financial Protection Bureau (CFPB) v. Community Financial Services Association of America Ltd.—a case challenging the legality of the agency’s funding structure, which flows through the Federal Reserve rather than through congressional appropriations. The U.S. Supreme Court in 2019 previously weighed in on the agency’s structure, holding in Seila Law v. CFPB that the removal protections of the agency’s single director unconstitutionally insulated the CFPB from presidential oversight.

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In the states

Idaho lawmakers modify approach to review of administrative rules

What’s the story? 

A new Idaho law requires legislative approval and periodic review of all administrative rules issued by state agencies.

Before the new law, all administrative rules in Idaho expired each year unless the state legislature passed a resolution reauthorizing the state’s regulations. The new law requires lawmakers to approve each final rule before it takes effect and slows down the legislative review process by placing each rule on an eight-year expiration cycle. The modified approach seeks to ensure “that each rule is periodically reviewed for continued relevance and applicability,” according to the bill’s statement of purpose.

The law, which passed the state House by a 55-9-6 vote and the state Senate by a 26-6-3 vote, will take effect on July 1, 2023.

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Arizona legislature sends REINS-style state law to governor’s desk

What’s the story? 

Arizona lawmakers on May 15, 2023, sent a state-level version of the REINS Act to Governor Katie Hobbs’ desk.

The Arizona bill, sponsored by state Representative Justin Wilmeth (R), would require the state legislature to ratify any state agency rule that, according to the text, is “estimated to increase regulatory costs or have an adverse impact on economic growth in the state by $500,000 or more within 5 years” before the rule can take effect.

The state House voted 31-27 and the state Senate voted 16-14 to approve the bill along party lines. Governor Katie Hobbs (D) had yet to either sign the bill or veto the legislation as of May 19, 2023.

Florida and Wisconsin lawmakers enacted REINS-style state laws in 2010 and 2017, respectively.

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When should the major questions doctrine apply?

Administrative law scholars Brianne Gorod, Brian Frazelle, and Alex Rowell argue in new scholarship for the Wake Forest Law Review that more specificity is needed to set parameters for judicial applications of the major questions doctrine. The authors contend that the major questions doctrine’s application to questions of economic and political significance is too broad and that other factors, such as the history of the agency’s authority, should also be considered in order to determine whether the major questions doctrine applies to a case:

“In West Virginia v. EPA, the Supreme Court held a climate-change policy unlawful by relying on what it called for the first time the “major questions doctrine.” In the wake of the Court’s decision, commentators and litigants have argued that this doctrine should prove fatal to a wide range of regulatory actions on topics ranging from the environment and economic policy to civil rights and immigration. This Article contends that those claims are wrong. … Most importantly, the economic and political significance of an agency’s action, however great, does not alone trigger application of the doctrine. Instead, to qualify as one of the ‘extraordinary cases’ in which the doctrine applies, additional factors must demonstrate that an agency is seeking to fundamentally alter its authority and expand it ‘beyond what Congress could reasonably be understood to have granted.’ In short, the doctrine applies only where an agency makes a breathtaking assertion of power that context reveals to be a dubious effort to transform the basic nature of its authority. The Court’s decision to limit the doctrine to such extraordinary cases makes sense because the doctrine is in tension with principles of textualism, the original understanding of the Constitution, and the judiciary’s limited role under the separation of powers. Aggressively employing the doctrine beyond the limited sphere prescribed by the Court would exacerbate those tensions and undermine the legitimacy of the courts. By relying on the doctrine only sparingly, as West Virginia instructs, courts can best maintain their constitutional role of interpreting the laws and avoid inappropriately interfering with the decisions of the elected branches.”

Want to go deeper? 

  • Click here to read the full text of “Major Questions Doctrine: An Extraordinary Doctrine for ‘Extraordinary’ Cases” by Brianne Gorod, Brian Frazelle, and Alex Rowell

Regulatory tally

Federal Register

Office of Information and Regulatory Affairs (OIRA)

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

  • Review of 37 significant regulatory actions. 
  • Three rules approved without changes; recommended changes to 32 proposed rules; two rules withdrawn from the review process.
  • As of May 1, 2023, OIRA’s website listed 117 regulatory actions under review.
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