ARTICLE III OF THE CONSTITUTION
Article III states that the “judicial Power of the United States shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish.”
Discrepancies between legislation passed by Congress and regulations enforced by the executive branch are reviewed by state and federal courts. In these cases the courts often seek to find the intent of Congress to discover whether the defendant is guilty of committing an illegal act, or if enforcement of a rule is unconstitutional — some have reached the Supreme Court.
There are several prominent Supreme Court cases that have established precedents for how courts interact with agency rulemaking activity, with the phrase "Chevron Deference" encapsulating the key takeaway from the most widely cited case.
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.
"The Clean Air Act (the Act) required states that had not yet achieved national air quality standards to establish a permit program regulating new or modified major stationary sources of air pollution, such as manufacturing plants. The Environmental Protection Agency (EPA) passed a regulation under the Act that allows states to treat all pollution-emitting devices in the same industrial grouping as though they were a single “bubble”. Using this bubble provision, plants may install or modify one piece of equipment without needing a permit if the alteration does not increase the total emissions of the plant. Several environmental groups, including the Natural Resources Defense Council, challenged the bubble provision as contrary to the Act. The U.S. Court of Appeals for the D.C. Circuit set aside the EPA regulation as inappropriate for a program enacted to improve air quality."
The court asked, "Does the Clean Air Act permit the EPA to define the term "stationary source" to mean whole industrial plants only, which allows plants to build or modify units within plants without the permit required under the Act?"
The court concluded, " Yes. Justice John Paul Stevens, writing for a unanimous court, reversed. The Supreme Court held that the bubble regulation was a reasonable interpretation of the term “stationary source” in the Clean Air Act. Congress did not have a specific intention for the interpretation of that term, and the EPA’s regulation was a reasonable policy choice. The regulation also provided reasonable accommodations for the many competing interests affected by the Act. Justices Thurgood Marshall, William H. Rehnquist, and Sandra Day O’Connor did not participate."
- Vermont Yankee Nuclear Power Corporation v. Natural Resources Defense Council, Inc.
“The United States Supreme Court held that a court cannot impose rulemaking procedures on a federal government agency. The federal Administrative Procedure Act of 1946 and an agency's statutory mandate from Congress establish the maximum requirements for an agency's rulemaking (and adjudicative) process. An agency may grant additional procedural rights in the regulatory process (within constitutional and statutory limits). However, a reviewing court cannot "impose upon the agency its own notion of which procedures are 'best' or most likely to further some vague, undefined public good" (435 U.S. at 549); to do so would exceed the limits of judicial review of agency action.”
- Auer v. Robbins
"Francis Bernard Auer, a St. Louis police sergeant, other St. Louis police sergeants, and a lieutenant sued the respondent police commissioners, including David A. Robbins, for overtime pay under the Fair Labor Standards Act of 1938 (FLSA). The commissioners argued that Auer and the other petitioners were "bona fide executive, administrative, or professional" employees exempted from overtime pay requirements by the FLSA. Under the Secretary of Labor's regulations, that exemption applies to employees paid a specified minimum amount on a "salary basis," which requires that the "compensation...not [be] subject to reduction because of variations in the quality or quantity of the work performed." Auer claimed that they did not meet this test because, under the terms of the Police Department Manual, their compensation could theoretically be reduced for a variety of disciplinary infractions related to the "quality or quantity" of their work. The District Court and the Court of Appeals disagreed with Auer's claim. Both courts held that the salary basis test was satisfied."
The court asked, " Must sergeants and lieutenants in the St. Louis Police Department be paid for working overtime pursuant to the Fair Labor Standards Act of 1938?"
The court concluded, " No. In a unanimous decision, authored by Justice Antonin Scalia, the Court ruled that sergeants and lieutenants are exempt as salaried employees from the federal Fair Labor Standards Act. The justices rejected the argument that the possibility of suspension without pay moves the officers out of the exempt category."
- Bowles v. Seminole Rock & Sand Co.
“In 1945, the Supreme Court blessed a lesser-known type of agency deference in Bowles v. Seminole Rock. Also known as Auer deference, it affords deference to agency interpretations of their own regulations. Courts regularly defer to agencies under this doctrine, regardless of where the interpretations first appear or how long-standing they are.”
- Kisor v. Wilkie
"Petitioner James L. Kisor is a veteran of the US Marine Corps who served in the Vietnam War. In 1982, Kisor filed a claim for disability benefits with the Department of Veterans Affairs (VA) asserting that he suffered from post-traumatic stress disorder (PTSD) as a result of his service in Vietnam. Ultimately, the VA denied his claim in May 1983. In June 2006, Kisor sought review of his previously denied claim, and the VA granted him relief under 38 C.F.R. § 3.156(a), which allows a petitioner to “reopen” a denial by “submitting new and material evidence.” In his 2006 petition, Kisor identified materials supporting his claim that existed in 1983 but which were not associated with his file.
Notably, the VA did not grant Kisor relief under Section 3.156(c), which authorizes the agency to “reconsider” a previously denied claim in the event that it “receives or associates with the claims file relevant official service department records that existed and had not been associated with the claims file when VA first decided the claim.” This provision is more favorable to veterans because it provides for a retroactive effective date for any benefits awarded, whereas benefits granted under Section 3.156(a) are effective only on the date the application to reopen was filed.
The VA’s decision (technically made by the Board of Veterans Appeals) relied on the meaning of the term “relevant” as used in 38 C.F.R. § 3.156(c)(1). The VA found that the additional documents (Kisor’s Form 214 and the Combat History document) did not qualify as “relevant” for purposes of this section because it did not “suggest or better yet establish that [petitioner] has PTSD as a current disability.” In the VA’s view, records are not “relevant” when they are not “outcome determinative.”
Court of Appeals for Veterans Claims affirmed the Board’s decision, and the Federal Circuit affirmed as well."
The court asked, " Should Auer v. Robbins, 519 U.S. 452 (1997), and Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945), be overruled?"
The court concluded, "Auer v. Robbins, 519 U.S. 452 (1997), and Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945)—which direct courts to give deference to an agency’s reasonable reading of its own genuinely ambiguous regulations—are not overruled.
Justice Elena Kagan announced the judgment and delivered an opinion in which Justices Ruth Bader Ginsburg, Stephen Breyer, and Sonia Sotomayor joined. Chief Justice Roberts joined in part, forming a majority of the Court for those parts.
Justice Kagan, writing for the 5-4 majority, first described the history of the case before it arrived before the Court.
Then, writing for a four-justice plurality, she described other examples of ambiguous regulations and explained the history of the doctrine of Auer deference. She explained that Auer deference is “rooted in a presumption that Congress would generally want the agency to play the primary role in resolving regulatory ambiguities” because agencies are best equipped to interpret the often-technical regulations at issue.
Writing again for the majority, Kagan continued to outline the requirements that must be met for Auer deference to apply: First, a court should not afford an agency Auer deference unless the regulation is genuinely ambiguous, a determination the court can make only after it has exhausted all the traditional tools of construction. Second, the agency’s reading must be reasonable, under the text, structure, and history of the regulation. Notwithstanding some courts’ interpretation to the contrary, the language “plainly erroneous” from Seminole Rock does not mean that agency constructions of rules are entitled to greater deference than agency constructions of statutes. Third, the regulatory interpretation must be one actually made by the agency; that is, it must be the agency’s authoritative or official position, not merely an ad hoc statement. Fourth, the interpretation must in some way implicate the agency’s substantive expertise, and fifth, it must reflect “fair and considered judgment.”
On behalf of the plurality, Kagan went on to address Kisor’s arguments. She explained that Auer is not inconsistent with the judicial review provision of the APA, nor does it circumvent the APA’s rulemaking requirements. Contrary to Kisor’s arguments, Kagan cited empirical evidence to support her position that Auer does not encourage agencies to issue vague and open-ended interpretations of those rules they prefer. Finally, she quickly dispensed of Kisor’s argument that it violates separation-of-powers principles.
On behalf of the majority, Kagan wrote that the doctrine of stare decisis cuts strongly against Kisor’s position. There is no “special justification” to reverse Auer, and even if the Court were wrong its assumptions about its presumption of what Congress would want, Congress can correct it.
Applying the principles outlined in the opinion, a redo is necessary for two reasons: The Federal Circuit “jumped the gun” in declaring the regulation ambiguous, and it also “assumed too fast” that Auer deference should apply in the event of genuine ambiguity.
Chief Justice Roberts wrote a separate concurrence in part to reiterate Justice Kagan’s assertion that overturning Auer and Seminole Rock was not warranted. He also noted that the cases in which Auer deference is appropriate largely overlap with cases in which it would be unreasonable for a court to be persuaded by an agency's interpretation of its own regulation. He pointed out that the gulf between the majority’s position and Justice Gorsuch’s dissent is not so great as it may initially appear.
Justice Neil Gorsuch penned a separate opinion, in which Justices Clarence Thomas and Brett Kavanaugh joined and Justice Samuel Alito joined in part, concurring in the judgment but highly critical of Justice Kagan’s opinion. On behalf of himself and three other justices, Justice Gorsuch wrote a history of Auer deference, describing the decision and resulting doctrine “an accident.” He went on to explain that Auer is inconsistent with the Administrative Procedure Act and the separation of powers principle. On behalf of himself and Justices Thomas and Kavanaugh, Justice Gorsuch responded to Justice Kagan’s public policy considerations and argued that while the majority gave lip service to stare decisis, it effectively changed the test set forth in precedents—which effectively overrules it in all but name.
Justice Kavanaugh wrote a separate opinion concurring in the judgment, in which Justice Alito joined. In his opinion, Justice Kavanaugh emphasizes two points: first, he reiterates the Chief Justice’s point that “the distance between” the two main opinions in this case “is not as great as it may initially appear,” and second, he expresses agreement with the Chief Justice that the decision in this case addresses only judicial deference to agency interpretations of their own regulations, and not at all judicial deference to agency interpretations of statutes."
- Business Roundtable v. SEC
D.C. Circuit finds SEC Proxy Access Rule to be arbitrary and capricious for inadequate economic analysis.
- Humphrey's Executor v. United States
President Hoover appointed, and the Senate confirmed, Humphrey as a commissioner of the Federal Trade Commission (FTC). In 1933, President Roosevelt asked for Humphrey's resignation since the latter was a conservative and had jurisdiction over many of Roosevelt's New Deal policies. When Humphrey refused to resign, Roosevelt fired him because of his policy positions. However, the FTC Act only allowed a president to remove a commissioner for "inefficiency, neglect of duty, or malfeasance in office." Since Humphrey died shortly after being dismissed, his executor sued to recover Humphrey's lost salary.
- Massachusetts v. EPA
Massachusetts and several other states petitioned the Environmental Protection Agency (EPA), asking EPA to regulate emissions of carbon dioxide and other gases that contribute to global warming from new motor vehicles. Massachusetts argued that EPA was required to regulate these "greenhouse gases" by the Clean Air Act - which states that Congress must regulate "any air pollutant" that can "reasonably be anticipated to endanger public health or welfare."
EPA denied the petition, claiming that the Clean Air Act does not authorize the Agency to regulate greenhouse gas emissions. Even if it did, EPA argued, the Agency had discretion to defer a decision until more research could be done on "the causes, extent and significance of climate change and the potential options for addressing it." Massachusetts appealed the denial of the petition to the Court of Appeals for the D.C. Circuit, and a divided panel ruled in favor of EPA.
- Abbott Laboratories v. Gardner
Did Congress authorize judicial review of the commissioner of the FDA's authority to require Abbott Laboratories to print the established name of a drug every time its proprietary name is used?
Yes. Writing for the majority in a 5-3 decision, Justice John Harlan wrote that where the legal issue is fit for judicial resolution and a regulation requires an immediate and significant change in plaintiffs' conduct with potentially serious penalties, the law permits access to the courts under the APA and the DJA. The Court found that congress did not intend to forbid pre-enforcement review of regulations like the "every time" rule. The legislature designed the statute's specific review provisions to provide additional remedies for parties in Abbott Laboratories' position, not to cut down traditional channels of review. The Court remanded the case to the court of appeals.