WASHINGTON—The Supreme Court this week issued a pair of rulings to limit the power of the federal government, curbing agencies’ ability to make regulations and take certain enforcement actions.
Chevron has been cited more than 18,000 times by federal courts and is “unquestionably one of the foundational decisions in administrative law,” according to the Congressional Research Service.
In overruling Chevron, the high court held that judges must use their traditional tools of statutory interpretation and that the “best” interpretation should govern. In doing so, it raised a series of questions about how Congress will make laws and how agencies will be expected to interpret them.
The majority held that the SEC was wrong in using in-house tribunals to enforce civil penalties. Instead, the Seventh Amendment requires the SEC—which was created in 1934 and authorized to use in-house proceedings in the wake of the 2008 financial crisis—to obtain civil penalties through jury trials in Article III courts, the court found.
Major Change Coming
Chief Justice John Roberts authored the majority opinion in Loper Bright, while Justices Clarence Thomas and Neil Gorsuch wrote concurring opinions.“Today, the Court places a tombstone on Chevron no one can miss,” Justice Gorsuch wrote. He said that in “doing so, the Court returns judges to the interpretive rules that have guided federal courts since its Founding.”
Both sides indicated in their opinions on Chevron that the court’s decision represented a major departure from longstanding precedent. While their decisions offer clues into the fallout, time may be the only way to tell how the federal government will be affected in the long term.
The June 28 decision will likely prompt reconsideration of multiple statutes and agencies’ applications of them.
Whenever the court overturns precedents, such as Roe v. Wade, it generally considers arguments surrounding “stare decisis,” a Latin phrase meaning “let the decision stand.” One of those factors is reliability, or the idea that Americans have made decisions based on the court’s precedent and will continue to do so.
But for the majority, Chevron had diminished reliability even as a longstanding precedent.
“Given the Court’s constant tinkering with and eventual turn away from Chevron, it is hard to see how anyone could reasonably expect a court to rely on Chevron in any particular case or expect it to produce readily foreseeable outcomes,” the majority wrote. “And rather than safeguarding reliance interests, Chevron affirmatively destroys them by allowing agencies to change course even when Congress has given them no power to do so.”
The dissent, meanwhile, suggested that the majority made a laughingstock of stare decisis by arrogating the power of courts.
“The majority cannot destroy one doctrine of judicial humility without making a laughing-stock of a second,” Justice Elena Kagan wrote in the dissent, referring to Chevron deference and stare decisis. She added that “if opinions had titles, a good candidate for today’s would be Hubris Squared.”
Justice Sonia Sotomayor similarly criticized the majority in Jarkesy by stating that it “pulls a rug out from under Congress without even acknowledging that its decision upends over two centuries of settled Government practice.”
Courts Getting More Authority
Both Jarkesy and Loper Bright shifted aspects of administrators’ powers to Article III courts. For Jarkesy, the court empowered juries which are part of the Article III process and make determinations often respected by judges.It’s unclear how this will play out in ensuing years, but it means that the SEC must include conventional courts, rather than bypassing them, in its enforcement process. Prior to Jarkesy, the commission could choose to pursue cases in an Article III court or in its own in-house tribunal.
Judicial review of the in-house decision has been available, but as Chief Justice Roberts noted, “such review is deferential” to the agency’s factual findings in the case.
Justice Gorsuch’s concurrence suggested the agency’s powers “stacked” the odds against defendants and cited data from The Wall Street Journal.
“The numbers confirm as much: According to one report, during the period under study, the SEC won about 90 percent of its contested in-house proceedings compared to 69 percent of its cases in court,” he said.
The opinions in Loper Bright and Relentless Inc. et al. v. Department of Commerce et al.—which were decided concurrently—focused more on judges’ discretion and their ability to interpret laws in light of complex subject matter involved in regulation.
He added that “at best, our intricate Chevron doctrine has been nothing more than a distraction from the question that matters: Does the statute authorize the challenged agency action?”
Justice Kagan’s dissent outlined worries about how judges would handle that deference and cited several laws that she indicated courts would have trouble interpreting. For example, she asked when “an alpha amino acid polymer” qualifies as a “protein” under the Public Health Service Act.
“I don’t know many judges who would feel confident resolving that issue,” she said. She also argued that “in each case, a statutory phrase has more than one reasonable reading.”
Court Divided on Administrative Authority
Justice Thomas’ majority 7–2 opinion in Consumer Financial Protection Bureau (CFPB) v. Community Financial Services Association of America may have offered court watchers hope of compromise on administrative authority.For both Jarkesy and Loper Bright, however, he joined Justices Gorsuch and Justice Alito—the lone dissenters in CFPB—in warning about the power of the administrative state. Both he and Justice Gorsuch did so in stark terms.
“Chevron compels judges to abdicate” their judicial power, Justice Thomas said in his concurrence. He also warned: “Although the Court finally ends our 40-year misadventure with Chevron deference, its more profound problems should not be overlooked.” The decades-old doctrine, he said, “violates the Constitution.”
Justices Kagan and Sotomayor and Justice Ketanji Brown Jackson each joined dissents in Jarkesy and Loper Bright. In her dissent, Justice Kagan praised Chevron and the regulation that followed.
“It has become part of the warp and woof of modern government, supporting regulatory efforts of all kinds—to name a few, keeping air and water clean, food and drugs safe, and financial markets honest,” she said.
Statutes, she argued, will “inevitably contain ambiguities that some other actor will have to resolve, and gaps that some other actor will have to fill.”
“And it would usually prefer that actor to be the responsible agency, not a court,” she wrote. “Some interpretive issues arising in the regulatory context involve scientific or technical subject matter. Agencies have expertise in those areas; courts do not.”
