SCOTUS blocks Department of Education rules on Title IX and student loans


In this edition of Checks and Balances:

Federal stories:

  • SCOTUS blocks Department of Education rules on Title IX and student loans. 
  • Air Force cites Loper Bright in refusal of EPA order.
  • ACUS adopts recommendations on federal administrative procedures.
  • Fifth Circuit rules against tip credit regulations, citing Loper Bright

State stories:

  • Wisconsin voters defeat two ballot measures related to nondelegation.
  • University of North Carolina argues for deference in state Supreme Court.
  • Wisconsin legislature and executive agencies at odds over groundwater standards.

Commentary:

  • Genova Burns LLC attorney Edward Bonnett Jr. on the U.S. Court of Appeals for the Sixth Circuit’s recent decision not to grant deference to the NLRB’s interpretation of the National Labor Relations Act.

Regulatory Tally:

  • 155 proposed rules and 292 final rules added to the Federal Register in August.
  • OIRA’s regulatory review activity.
  • Highlighted rule applying anti-money laundering (AML) standards to certain investment advisers.

In Washington

SCOTUS blocks Department of Education rules on Title IX and student loans

What’s the story?

The Supreme Court ruled in August to temporarily block two Department of Education rules: 

  • One expanded Title IX anti-discrimination provisions to sexual orientation and gender identity.
  • The other implemented the department’s student debt cancellation plan. 

Title IX

SCOTUS ruled 5-4 on August 16 to temporarily block enforcement of the department’s Title IX regulations. Two cases were brought before SCOTUS, challenging three provisions of the rule related to discrimination against transgender people. 

The justices unanimously agreed to block the three transgender discrimination provisions pending further litigation. A five-justice majority ruled to block the entire rule, arguing the Biden administration did not argue other parts were independent of the challenged provisions. Justice Sonia Sotomayor dissented, joined by Justices Elena Kagan, Neil Gorsuch, and Ketanji Brown Jackson, arguing the groups challenging Title IX “had not explained why the entire rule should be put on hold.”

Student debt

SCOTUS also ruled on August 28 to temporarily block enforcement of the department’s July 2023 student debt cancellation plan known as the SAVE plan. The court issued an unsigned order, which did not include an explanation for the decision.  

The background

The Title IX rule, which was scheduled to take effect on August 1, would expand Title IX regulations prohibiting sex-based discrimination to also prohibit discrimination based on gender identity and sexual orientation. It would require schools to use students’ preferred pronouns and allow students to use bathrooms aligned with their gender identities instead of their biological sex.  

Republican attorneys general in 26 states and conservative advocacy groups joined plaintiffs in filing eight lawsuits against the Department of Education’s Title IX rule. They argued the rule exceeded the department’s statutory authority.  

The Department of Education published the SAVE plan in July 2023 following the Supreme Court’s ruling in Biden v. Nebraska—a case in which the court overturned the Biden administration’s previous student debt cancellation plan under the HEROES Act. Biden administration officials responded to the decision, announcing they would establish a new student debt cancellation plan under the Higher Education Act. 

Two groups of Republican-led states filed lawsuits challenging the SAVE plan. The U.S. Court of Appeals for the Eighth Circuit ruled in favor of one of the challenges on August 9, 2024, arguing the states “demonstrated a sufficient likelihood of success that the SAVE Plan violates the major questions doctrine.”

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Air Force cites Loper Bright in refusal of EPA order

What’s the story?

The U.S. Air Force announced in July it would not comply with an Environmental Protection Agency (EPA) order to clean polluted drinking water in Tucson, Arizona. The Air Force argued federal regulators did not have the authority to issue the order, citing Loper Bright Enterprises v. Raimondo—the June 2024 SCOTUS case overturning Chevron deference. 

Stanford University Environmental Law Clinic Director Deborah Ann Sivas argued that since Chevron applied to rulemaking and not agency orders, the Air Force’s claim would expand the scope of Loper Bright beyond its original intent. 

The background

The EPA ordered the Air Force—which the EPA argued contaminated drinking water in Tucson with per- and poly-fluoroalkyl substances (PFAS)—to develop a plan to clean the city’s water. 

The emergency order was issued in May under the Safe Drinking Water Act and required the Air Force to create a plan within 60 days to clean the contaminated drinking water. The order directed the Air Force to develop a system for the specific purpose of removing PFAS from the water. 

SCOTUS ruled in June in Loper Bright to overturn Chevron deference, holding that federal courts may not defer to an agency’s interpretation of an ambiguous statute. The Air Force contended that the Loper Bright decision applies to the EPA’s authority to issue an emergency order to regulate drinking water.  

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ACUS adopts recommendations on federal administrative 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 four recommendations during the 81st Plenary Session aimed at “improv[ing] the efficiency, adequacy, and fairness of federal administrative procedure.”

The recommendations, published in the Federal Register on July 9, put forth what ACUS considers to be best practices for the following processes:

  • drafting statutes providing for judicial review of agency rules.
  • providing written guidance.
  • involving senate-confirmed officials in adjudicating cases across federal administrative programs.
  • managing congressional constituent service inquiries.

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Fifth Circuit rules against DOL tip credit regulations, citing Loper Bright

What’s the story?

The United States Court of Appeals for the Fifth Circuit ruled August 23 to block the Department of Labor’s (DOL) 2021 tip credit rule, reversing a district court decision. Appeals Judge Jennifer Walker Elrod said the court based the reversal on Loper Bright Enterprises v. Raimondo, which overturned Chevron deference on June 28. 

The lower court’s July 2023 decision upholding the tip credit rule relied on Chevron deference. Elrod said in the Fifth Circuit’s decision, “While the district court was of course correct to apply the Chevron framework at the time of its decision, the Supreme Court’s intervening opinion in Loper Bright requires us to depart from the district court’s analysis at the very start. We must parse the text of the FLSA using the traditional tools of statutory interpretation.”

The background

DOL issued a final rule, effective December 28, 2021, withdrawing part of the tip regulations under the Fair Labor Standards Act (FLSA) and revising another portion of the act regulating when employers can take a tip credit. Tip credits allow employers “to satisfy a portion of its minimum wage obligation to a ‘tipped employee’ by taking a partial credit … toward the minimum wage based on the amount of tips an employee receives.” 

The rule also clarified a distinction between tip-producing work and work that supports tip-producing work and codified agency guidance referred to as the 80/20 rule. The guidance indicated the amount of non-tipped work that tipped employees may perform while working in a tipped occupation.  

Restaurant groups filed a lawsuit in December 2021 challenging the DOL rule, arguing the rule exceeded the DOL’s statutory authority and conflicted with the FLSA. 

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In the states

Wisconsin voters defeat two ballot measures related to nondelegation

What’s the story? 

Voters in Wisconsin defeated two constitutional amendments on August 13 related to state appropriations authority. The ballot measures proposed strengthening the state’s nondelegation doctrine—an administrative law principle that limits lawmakers’ ability to delegate legislative powers to executive agencies. 

The measures’ opponents argued the legislature would slow the distribution of federal funds if it failed to meet to approve spending. The Wisconsin Votes No coalition said they were “proud to have worked arm-in-arm with a broad mix of organizations that shared the same concerns over the radical overreach these amendments represented.”

State Sen. Howard Marklein (R), a supporter of the measures, argued they would have increased “accountability, efficiency, and transparency in the expenditure of funds received from the federal government by restoring the legislature’s role in approving those expenditures.” 

The background

The Wisconsin State Legislature approved the ballot measures on February 22 to appear on the ballot as legislatively referred constitutional amendments. 

Wisconsin Question 1 would have prohibited the state legislature from delegating its power to appropriate money and was defeated 57.45%-42.55%. 

Wisconsin Question 2 would have required legislative approval via a joint resolution before the governor could expend federal money appropriated to the state. It was defeated 57.53%-42.47%.

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University of North Carolina argues for deference in state Supreme Court  

What’s the story? 

The University of North Carolina (UNC) Board of Regents filed a brief in the North Carolina Supreme Court on August 14, arguing the university should be granted deference in Mitchell v. The University of North Carolina Board of Governors. The case centers on the question of when North Carolina courts should defer to an agency’s interpretation of its own rules and regulations.

A group of briefs filed in May in favor of Mitchell argued the court should use the case to examine when deference should be applied to agencies. The John Locke Foundation argued, “The movement to restrict or eliminate all forms of administrative deference is clearly gaining momentum, and it is not too late for North Carolina to become a leader rather than a follower in that movement.” 

The UNC system argued in favor of deference in its brief, which said, “Dr. Mitchell’s termination was consistent with the clear and unambiguous procedures outlined by WSSU’s Faculty Handbook and the University’s Code … Even if those procedures were ambiguous, however, it would be appropriate to afford some deference to the University’s consistent and longstanding reading of its regulations and read them to give authority to university chancellors over these matters.”

The background

The North Carolina Supreme Court in March 2024 agreed to hear Mitchell v. The University of North Carolina Board of Governors. Former university professor Alvin Mitchell brought the case, arguing the university did not follow proper procedures when firing him. 

An oversight board and trial court upheld the university’s decision to fire Mitchell before the case was appealed to the North Carolina Court of Appeals. The state court ruled in the university’s favor, granting deference to the university’s interpretation of its procedures. 

The North Carolina Supreme Court had not set a date for oral argument as of September 15.

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Wisconsin legislature and executive agencies at odds over groundwater standards 

What’s the story? 

The Wisconsin Groundwater Coordinating Council (GCC) issued a report to the state legislature on August 31, arguing lawmakers should address 46 groundwater standards proposed by the state Department of Natural Resources (DNR) and the state Department of Human Services (DHS). The report is part of a continuing conflict between the state executive and legislative branches over enforcement and rulemaking authority. 

State Sens. Howard Marklein (R) and Mark Born (R) argue the legislature tried to address groundwater pollution standards while limiting executive authority. They say Gov. Tony Evers (D) vetoed legislative solutions because his administration wants to use appropriations as “an unaccountable slush fund … to bring enforcement action against farmers and other innocent landowners.” 

Steve Elmore—the DNR drinking water and groundwater program director—argues the Wisconsin REINS Act (which requires legislative approval for rules costing more than $10 million) is causing unnecessary delays in executive groundwater contaminant standards. Elmore said the REINS Act has “been something that has limited our ability to set new groundwater standards, and so then the recommendations just keep piling up.”

The background

The DNR and DHS had proposed 46 groundwater pollution standards rules requiring legislative approval under the Wisconsin REINS Act as of August 2024. The legislature has not approved the rules, arguing they would give the agencies too much power to punish farmers and other landowners.

The Wisconsin State Assembly approved a bill in February 2024 related to groundwater pollution standards. It included a provision limiting enforcement action against certain landowners. Gov. Evers vetoed the bill, arguing it would have put too many limits on the DNR’s authority to address standards and let “those who cause PFAS contamination off the hook.”

The Wisconsin REINS Act, or 2017 Wisconsin Act 57, is a state law signed in 2017 by former Governor Scott Walker (R) requiring state legislative authorization of administrative rules that carry compliance and implementation costs of $10 million or more over a two-year period. The law was modeled on a proposed federal law with the same name. 

Wisconsin is one of four states to enact a REINS-style law as of September 2024:

  • The Kansas State Legislature voted to override Gov. Laura Kelly’s (D) veto of a REINS-style state law in April 2024
  • Indiana Gov. Eric Holcomb (R) signed a REINS-style bill into law in March 2024
  • The Florida State Legislature voted to override former Republican Gov. Charlie Crist’s veto of a REINS-style state law in 2010

Click here to read more about the two REINS-style state laws enacted in 2024 and other REINS-related legislation in Ballotpedia’s Administrative State 2024 Legislation Report. 

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Loper Bright‘s application to cases of agency adjudication 

Attorney Edward Bonnett Jr. wrote in a recent JD Supra post about the U.S. Court of Appeals for the Sixth Circuit’s recent decision not to grant deference to the National Labor Relations Board’s (NLRB) interpretation of the National Labor Relations Act. Bonnett argues the case paves the way for a broader application of Loper Bright to all cases of agency adjudication—not just adjudications involving rulemaking:

The Loper Bright case dealt with agency rulemaking as opposed to agency adjudication, and the NLRB largely engages in rule-making by case adjudication. When reviewing agency adjudications, courts did not invoke Chevron deference often to uphold agency decisions, as opposed to agency rules and regulations. However, the 6th circuit decision is stunning in that it pays no deference to the NLRB’s garden variety holding that the employer violated its duty to provide information. Rather, the court performed a de novo review of the Act with respect to the employer’s duty to bargain and furnish information. Granted, the court did not reverse the NLRB here, but the fact that it gave the NLRB’s decision no deference potentially opens the gates to future judicial scrutiny of every NLRB adjudication, not just adjudications that include rule making.

Want to go deeper

  • Click here to read the full text of “Sixth Circuit Declines to Defer to NLRB Decision Citing Loper Bright” by Edward Bonnett, Jr.

Regulatory tally

Federal Register

The Federal Register publishes proposed and finalized administrative agency rules and regulations, policy statements, and interpretations of existing rules every federal working day. The Federal Register’s August highlights are as follows:


Office of Information and Regulatory Affairs (OIRA)

OIRA reviews all significant actions, defined as rules that have had or may have a large impact on the economy, environment, public health, or state and local governments and communities. Significant regulatory actions also include agency rules that may conflict with other regulations or with the priorities of the president. OIRA’s August regulatory review activity included the following actions:

  • Review of 22 significant regulatory actions. 
  • Recommended changes to all 22 proposed or final rules
  • As of September 1, 2024, OIRA’s website listed 159 regulatory actions under review.
  • Notable regulation: OIRA approved the intent of, but recommended changes to, a Department of the Treasury final rule that will cost an estimated $810 million per year to implement. It will affect investment advisor firms and federal agencies. The Treasury estimates the rule will cost small investment advisers—entities managing less than $25 million in assets or maintaining less than $5 million in total assets on the last day of the fiscal year—an average of $40,000 per year.
    • The rule expands the definition of “financial institution” to include certain investment advisers and requires them to comply with anti-money laundering (AML) and countering the financing of terrorism (CFT) reporting requirements and policies under the Bank Secrecy Act (BSA).
    • The final rule will take effect January 1, 2026.
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