SCOTUS limits agencies’ regulatory, adjudicatory scope

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 two recent United States Supreme Court decisions that narrowed the scope of agency regulatory and adjudicatory authority, respectively; legislation proposed by U.S. Senator Rick Scott (R-Fla.) seeking to make federal agency employees fireable at-will; and a bill from U.S. Senator Michael Bennet (D-Colo.) that would create a new independent federal agency to regulate artificial intelligence.

At the state level, we take a look at a North Carolina case that could serve as a vehicle for the state to clarify its approach to judicial deference.

We also highlight new scholarship examining the use of state-level litigation to challenge agency regulations based on alleged flaws in the underlying economic analysis. We wrap up with our Regulatory Tally, which features information about the 184 proposed rules and 234 final rules added to the Federal Register in May and OIRA’s regulatory review activity.

In Washington

SCOTUS limits agencies’ regulatory, adjudicatory scope

What’s the story?

The U.S. Supreme Court issued decisions in two cases last month that limited the regulatory scope and the adjudicatory jurisdiction of the Environmental Protection Agency (EPA) and the National Labor Relations Board (NLRB), respectively.

In a decision echoing the court’s 2022 ruling in West Virginia v EPA that narrowed the scope of the agency’s authority to regulate greenhouse gas emissions, the court on May 25, 2023, unanimously held in Sackett v. EPA that the EPA’s regulatory authority over the nation’s wetlands is limited to those with “a continuous surface connection to bodies that are ‘waters of the United States,’” according to Justice Samuel Alito’s majority opinion. In an opinion concurring with the judgment, Justice Elena Kagan agreed with the holding but expressed concern that the court’s reasoning “substitutes its own ideas about policymaking for Congress’s.”

In a case concerning the NLRB’s jurisdiction to adjudicate labor disputes, the court on June 1, 2023, held 8-1 in Glacier Northwest Inc. v. International Brotherhood of Teamsters that construction company Glacier Northwest Inc. could proceed with its state tort claim challenging the destruction of property by strikers during a labor dispute without first adjudicating the dispute before the NLRB. 

Justice Amy Coney Barret argued in the opinion “that the [National Labor Relations Act] does not shield strikers who fail to take ‘reasonable precautions’ to protect their employer’s property.” Justice Ketanji Brown Jackson, in a dissenting opinion, claimed that “the Board—and not the courts—should ordinarily take the first crack at resolving contentious, fact-bound labor disputes of this nature.”

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New bill would make federal employees fireable at-will

What’s the story?

U.S. Senator Rick Scott (R-Fla.) on May 9, 2023, introduced the Public Service Reform Act—legislation that aims to convert all civil service employees into at-will employees of the federal government. 

S. 1496 would limit civil service removal protections that, according to Scott, prevent agency leaders from firing poor-performing federal employees. The bill would also eliminate the Merit Systems Protection Board (MSPB) since, as at-will employees, fired employees would no longer be able to appeal their removal to the agency. 

The bill’s House sponsor, Representative Chip Roy (R-Texas), argued in a statement that the change would “reinstate accountability to the people for the federal bureaucracy by requiring that like any private sector employee, federal workers can be removed from their positions.”

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Proposed legislation seeks to regulate AI

What’s the story?

U.S. Senator Michael Bennet (D-Colo.) on May 18, 2023, filed legislation aiming to regulate artificial intelligence (AI) through the creation of a new independent federal agency.

S. 1671, the Digital Platform Commission Act of 2023, would establish a Federal Digital Platform Commission with broad authority in part to protect consumers “from deceptive, unfair, unjust, unreasonable, or abusive practices committed by digital platforms,” according to the text. The bill defines digital platforms as social media sites, search engines, and AI companies—like ChatGPT—that offer algorithmically generated content.

Bennet argued in a statement that the new agency would help “ensure AI tools and digital platforms operate in the public interest.”

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In the states

North Carolina case raises questions about state deference

What’s the story? 

Attorneys for Alvin Mitchell, a tenured Winston-Salem State University professor, on May 31, 2023, urged the North Carolina Supreme Court to hear the appeal of his firing and “thoughtfully consider the deference issue” in the case.

The North Carolina Court of Appeals on April 4, 2023, affirmed the University of North Carolina System’s 2019 decision to fire Mitchell following alleged misconduct. The judges applied Auer deference—a deference doctrine that calls for judges to defer to agency interpretations of their own regulations—to uphold the university’s decision to fire Mitchell.

Mitchell’s attorneys appealed to the North Carolina Supreme Court, arguing in part that deference prevented judicial review of Mitchell’s constitutional challenge to the termination of his tenured employment. The attorneys further urged the court to consider the lower court’s application of deference since, on behalf of the university, “the Solicitor General has arrived to articulate and defend the State’s position on deference.”

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State-level challenges to regulatory analysis

New scholarship from the Mercatus Center at George Mason University, “Battling Overregulation in State Courts,” suggests that legal challenges to state regulations based on alleged deficiencies in the underlying economic analysis could serve as a tool to further agency accountability in part by motivating agencies to improve the quality of their economic analysis procedures:

“The fact that most states have seen fit to enshrine an economic-analysis requirement in the state APA is indicative of a strong commitment to economic analysis. The relative scarcity of challenges to state agency rules alleged to have shoddy economic analysis is therefore somewhat puzzling. 

“Ascertaining precisely why such challenges are far less common at the state level is beyond the scope of this paper. I, however, argue that the prospects for successful challenges to state regulations based on inadequate economic analysis are far greater than the sparse record might suggest. I consider challenges that have succeeded at the federal level and then provide a road map for raising similar challenges at the state level, showing how state APAs often contain the same requirements that have proven a fruitful source of litigation at the federal level.”

Want to go deeper

  • Click here to read the full text of “Battling Overregulation in State Courts” by Reeve Bull.

Regulatory tally

Federal Register

Office of Information and Regulatory Affairs (OIRA)

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

  • Review of 35 significant regulatory actions. 
  • One rule approved without changes; recommended changes to 30 proposed rules; two rules withdrawn from the review process; two rules subject to a statutory or judicial deadline.
  • As of June 1, 2023, OIRA’s website listed 128 regulatory actions under review.
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