Justices Eye New Chevron Approach As Industry Seeks End To Deference

Source: By David LaRoss, Inside Washington Publishers • Posted: Sunday, December 5, 2021

The Supreme Court is weighing whether to curb — or even overturn — its long-standing Chevron doctrine that guides deference to EPA and other agencies as it considers a just-argued Medicare case, which industry groups say could be a vehicle to restrict EPA’s regulatory powers under several statutes.

During Nov. 30 argument in American Hospital Association (AHA), et al. v. Becerra, et al., justices from the high court’s liberal and conservative wings both signaled that they were open to at least narrowing application of the long-standing Chevron test, which generally requires courts to defer to agencies’ “reasonable” interpretations of ambiguous statutory text.

Most prominently, Justices Samuel Alito and Neil Gorsuch — both of whom have been critics of Chevron — asked Donald Verrilli, the former Obama-era solicitor general who argued the case for AHA, whether he was seeking to overturn the doctrine in order to scrap a decision by the U.S. Court of Appeals for the District of Columbia Circuit backing the government’s position on Medicare reimbursement rates, and what if anything should replace it.

“If the only way we can reverse the D.C. Circuit is to overrule Chevron, do you want us to overrule Chevron?” Alito asked — to which Verrilli replied, “Yes. We want to win the case.”

Soon after, Gorsuch asked, “You indicate that we should reconsider Chevron . . . What would you have us replace it with? What would it look like in your world?” But Verrilli dodged that subject, saying he “wouldn’t presume to tell the Court what it should do in response to that question” and focusing instead on claims that the Medicare statute at issue in AHA is unambiguous and should not trigger Chevron at all.

But several industry and conservative groups have tackled that question head-on in amicus briefs, saying lower courts’ application of the deference doctrine has allowed EPA and other agencies to violate clear “statutory commands” on subjects ranging from the renewable fuel standard (RFS) to finance regulations.

“The risk of administrative commandeering of the law — bending it to their own will or otherwise displacing clear congressional command — is considerable. This case provides a clear instance of that phenomenon, and amici have experienced many others,” reads an amicus brief filed jointly by the National Association Of Home Builders, American Farm Bureau Federation, American Fuel & Petrochemical Manufacturers, National Cattlemen’s Beef Association and National Mining Association.

For instance, they cite the 2015 Supreme Court decision Michigan v. EPA, where a 5-4 majority held that the agency was wrong to craft a Clean Air Act finding that it was “appropriate and necessary” to regulate power plants’ mercury emissions without considering compliance costs.

That decision left the underlying rule in place, but the Trump EPA used it as justification to reverse the threshold finding — a move the Biden administration is now reconsidering.

And in a footnote, the brief says a ruling to narrow or scrap Chevron could also aid the fuel sector’s long-running bid to change the RFS “point of obligation,” after the U.S. Court of Appeals for the District of Columbia Circuit rejected on deference grounds arguments first raised in a case known as Alon Refining v. EPA that the agency must reconsider each year its policy of applying the program’s compliance mandates to refiners and importers, but not fuel blenders.

“The D.C. Circuit allowed EPA to evade the clear statutory command by deeming the command ambiguous,” the industry coalition writes. “This Court did not grant certiorari, but reversing in the present case will help cure the underlying problem in Alon: deep-seated, reflexive deference.”

‘Cabined’ Chevron

While Alito and Gorsuch raised the possibility of overturning Chevron altogether during oral argument, and several conservative amici urged the court to take that step, other voices are instead pushing for the doctrine to survive in a more limited form.

For instance, Justice Brett Kavanaugh — himself a long-standing critic of broad judicial deference to agencies — said in an exchange with Verrilli that the court could deliver a win for AHA by putting new emphasis on a footnote in the original 1984 Chevron decision that said courts should go through an intensive process of statutory interpretation before declaring a law to be “ambiguous” and thus worthy of deference.

“If you take Footnote 9 of Chevron seriously, that says to apply all the traditional tools of statutory interpretation and construction, and you get — presumably, if you do that, you get an answer. I understand that to be what you’re saying we should do here and not give up too soon, but follow it all the way through,” Kavanaugh said.

In response, Verrilli both embraced that approach and said it would follow from the court’s 2019 decision that put similar limits on so-called Auer deference to agencies’ interpretations of their own rules, known as Kisor v. Wilkie.

“[W]e’re advocating the Court essentially follow the path that was set forth for Auer deference in Kisor. The same idea here,” Verrilli said.

That would be in line with the outcome sought by the U.S. Chamber of Commerce, which argued in its amicus brief that the court should stop short of overturning Chevron but send a clear signal that the doctrine is limited.

“In short, misuse of Chevron is all too common in the lower courts, and it is likely to continue absent the clearest and strongest of messages from this Court. The Court should therefore step in to make clear that the continued vitality of Chevron deference depends on taking seriously the constitutional and prudential constraints that cabin its scope,” the Chamber said.

Higher Bar

Similarly, a coalition of GOP attorneys general (AGs) argued as amici that the best way for the justices to rework Chevron would be to establish a higher bar for when an agency’s interpretation of the law is truly reasonable.

“The fundamental lesson of these decisions is that Chevron does not require courts to take the agency at its word that its decision is reasonable — that is, that it falls within the scope of its delegated authority. As one leading commentator has observed, ‘what the reasonable meanings might be is, within the Chevron universe, a question for the courts to decide,’” reads the brief filed by the AGs of Indiana, Georgia, Louisiana, Mississippi, Nebraska, Oklahoma, Texas and Utah.

Even Assistant Solicitor General Christopher Michel, who argued the case for the Department of Justice, said he could “accept” a Kisor-like approach as a general principle in an exchange with Justice Amy Coney Barrett, though he maintained that applying that framework would still support the government’s position on Medicare payments.

“We also recognize, as I think Justice Kavanaugh said earlier, that Footnote 9 of Chevron indicates that a court should, you know, apply all the tools of statutory construction. We accept that approach,” he told Barrett.

Barrett was asking whether courts should apply deference at all in cases where competing interpretations of a law each produce “superfluities” — elements of the statute that become meaningless or redundant as parts of the whole.

“So the D.C. Circuit said that the basis for Chevron deference here was that resolving which superfluity was worse” should be up to the agency, Barrett said.

But she continued, “It seems to me that that might be just an interpretive question, you know, the classic problem of statutory interpretation that a court should resolve, that the [Administrative Procedure Act] says courts resolve, as opposed to one that reflects some sort of delegation to the agency.” — David LaRoss (dlaross@iwpnews.com)