SCOTUS takes up second Chevron case, bump stock ban challenge

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 second case challenging Chevron deference and a separate case challenging a Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) rule banning bump stock devices; a decision by the Government Accountability Office (GAO) finding that the Securities and Exchange Commission’s (SEC) cryptocurrency guidance meets the definition of a rule and must be subject to the Congressional Review Act; and the Office of Management and Budget’s (OMB) 2020-2022 report on regulatory costs and benefits.

At the state level, we take a look at a challenge to Idaho’s new rulemaking process; the Ohio Supreme Court’s decision to reject Auer deference in the state; and claims from Republican lawmakers in Minnesota that the state’s education department exceeded its authority in new proposed social studies content standards.

We also highlight recent commentary from law professor Aaron-Andrew P. Bruhl on the potential impact of upcoming SCOTUS cases on previous Chevron decisions. We wrap up with our Regulatory Tally, which features information about the 183 proposed rules and 223 final rules added to the Federal Register in October and OIRA’s regulatory review activity.

In Washington

SCOTUS takes up second Chevron case, bump stock ban challenge

What’s the story?

The U.S. Supreme Court on October 13, 2023, agreed to hear Relentless, Inc. v. Department of Commerce—a case challenging an agency’s interpretation of a federal fishery law that could affect future applications of Chevron deference by the federal courts. The case is being heard in conjunction with Loper Bright Enterprises v. Raimondo, which challenges the same regulation. 

The two cases have raised questions among journalists and legal scholars about whether the court will overturn Chevron deference or clarify the scope of the doctrine’s application. Justice Ketanji Brown Jackson recused herself from Loper Bright Enterprises v. Raimondo after participating in the case while serving on a lower court, however, she will participate in the decision of Relentless, Inc. v. Department of Commerce

SCOTUS also agreed on November 3, 2023, to hear Garland v. Cargill, which challenges the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) rule banning bump stock devices. Gun owners and organizations challenged the rule, arguing in multiple lawsuits that the agency lacked the authority under federal law to issue the rule. The U.S. Fifth Circuit Court of Appeals ruled in January 2023 that the agency’s action exceeded its statutory authority and declined to apply Chevron deference. 

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GAO classifies SEC cryptocurrency guidance as a rule

What’s the story?

The Government Accountability Office (GAO) ruled on October 31, 2023, that the Securities Exchange Commission’s (SEC) cryptocurrency accounting guidance qualifies as a rule subject to review under the Congressional Review Act (CRA).

The SEC published Staff Accounting Bulletin 121 on March 31, 2022, effective April 11, 2022, aimed at providing “interpretive guidance for entities to consider when they have obligations to safeguard crypto-assets held for their platform users,” according to the bulletin. The SEC described the bulletin as guidance—government agency documents that are non-binding and interpret or advise parties about rules, laws, and procedures.

The GAO argued that the bulletin meets the definition of a rule as outlined in the Administrative Procedure Act (APA) and therefore must be subject to the CRA. The CRA requires agencies to submit a report on new rules to Congress for review and establishes a process for Congress to disapprove rules. GAO argued that “[a]lthough the Bulletin was published by staff who lack the Commission’s general rulemaking authority, our prior precedent and CRA’s legislative history demonstrate that the Bulletin is still covered by CRA.” Pursuant to the GAO’s decision and the CRA, the SEC must submit the bulletin as a rule to Congress for congressional review.

The SEC had not responded to the decision as of November 16, 2023.      

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OMB issues 2020-2022 regulatory cost-benefit report

What’s the story?

The Office of Management and Budget (OMB) on October 27, 2023, issued its report on the costs and benefits of major rules—a term defined by the Congressional Review Act as regulations with associated economic costs of $100 million or more—issued by federal agencies for fiscal years 2020-2022. 

Of the 9,778 total rules published in the Federal Register between 2020-2022, the report identified more than 200 major rules, 31 of which had agency estimates of both costs and benefits. The report also included agency estimates of benefits for three rules, agency estimates of costs for 58 rules, and agency estimates of federal budget or non-budget transfers for 115 rules. 

For the 14 rules with cost and benefit estimates for fiscal year 2022, the report estimated a total of $25.2 billion to $48.2 billion in benefits and $16.9 billion to $19.4 billion in costs. 

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In the states

Idaho state agency challenges new rulemaking process in court

What’s the story? 

The Idaho Supreme Court agreed to hear arguments in a constitutional challenge to the state’s new rulemaking process, which took effect on July 1, 2023.

House Bill 206 passed the Idaho State Legislature in March 2023. The law amended the state’s rulemaking process to require lawmakers to approve final rules before they take effect and place each rule on an eight-year expiration cycle. 

The Idaho State Athletic Commission and the Division of Professional Licenses filed a complaint on October 6, 2023, arguing that the law violates “the separation of powers mandate because it usurps from the executive branch the power to promulgate fully enforceable administrative rules.” The commission also argued that the case was time-sensitive because the agency did not have any rules approved or in effect as of October 2023 when the petition was filed. 

The Idaho Supreme Court will hear oral arguments in the case in December 2023. 

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Ohio Supreme Court rejects Auer deference

What’s the story? 

The Ohio Supreme Court on October 18, 2023, issued a ruling that ended the practice of state courts deferring to state agency interpretations of ambiguous regulations—a doctrine known as Auer deference in the federal courts.  

In re Application of Alamo Solar I, LLC concerned challenges from a citizen group that opposed the development of two solar farms in Preble County, Ohio. The Ohio Power Sitting Board had approved the solar farms and imposed certain conditions on the development of the facilities. Though the Ohio Supreme Court affirmed the agency action as lawful, Justice Pat DeWine argued against the court’s exercise of Auer deference. 

Writing for the majority, Dewine cited the court’s 2022 decision in TWISM Ents., LLC v. State Bd. of Registration for Professional Engineers & Surveyors that ended Chevron deference in the state. He further argued, “When a court defers to an agency’s interpretation of its own regulation, it allows the agency to assume the legislative power (the rule drafter), the judicial power (the rule interpreter), and the executive power (the rule enforcer).”

In a concurring opinion, Justice Jennifer L. Brunner argued that the court was not tasked with considering agency deference in the case. Brunner wrote that “the agency-deference issue addressed in TWISM … plays no part in our resolution of this case, and the majority’s discussion of TWISM is a distraction that is beyond the scope of what we were tasked with deciding.”

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Minnesota lawmakers argue proposed social studies standards exceed education department’s authority

What’s the story? 

The Minnesota Office of Administrative Hearings on November 8 and November 9, 2023, held public hearings regarding the Minnesota Department of Education’s (MDE) proposed changes to state social studies content standards, which Republican state lawmakers have argued exceed the department’s statutory authority. 

The department is authorized by state statute to update content standards every 10 years. MDE issued a proposed rule on September 25, 2023, regarding changes to K-12 social studies standards related to citizenship and government; economics; geography; United States and world history; and ethnic studies. Minnesota Education Commissioner Willie Jett stated in a notice that the proposed changes “will ensure that Minnesota’s Social Studies standards require the rigor and understanding necessary to support literate and capable students and citizens.”

A group of 51 Republican members of the Minnesota House of Representatives sent a letter to the administrative law judge prior to the hearing, arguing that the inclusion of ethnic studies was an overreach of the department’s statutory authority. The content, according to the letter, exceeds the scope of social studies outlined in the state statute, which includes history, geography, economics, and government and citizenship. 

Eric L. Lipman, the administrative law judge who heard the case, is expected to issue a decision by January 3, 2024. If approved, the new social studies content standards would go into effect in the 2026-27 school year. 

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The future of Chevron deference

In recent commentary for the Yale Journal on Regulation’s Notice and Comment blog, law professor Aaron-Andrew P. Bruhl discussed the potential impact of the upcoming Supreme Court decisions in Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce concerning the future of Chevron deference:

In determining what the Court should do in these upcoming cases, and perhaps what it will in fact do, we should consider what overruling Chevron would mean for prior cases decided under the Chevron regime. Although the Court itself has famously been ignoring Chevron of late, the lower federal courts, where almost all of the work happens, have used Chevron thousands of times, and so it matters what happens to that huge stock of precedents applying it. There are several possible approaches to those existing cases, some more disruptive than others. This comment canvasses the possibilities and reflects on their relative strengths and weaknesses.

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  • Click here to read the full text of “What would happen to all of the prior Chevron cases in a non-Chevron world?” by Aaron-Andrew P. Bruhl.

Regulatory tally

Federal Register

Office of Information and Regulatory Affairs (OIRA)

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

  • Review of 39 significant regulatory actions. 
  • Two rules approved without changes; recommended changes to 35 proposed rules; two rules withdrawn from the review process.
  • As of November 1, 2023, OIRA’s website listed 146 regulatory actions under review.
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