Two cases decided at the end of the October 2023 Supreme Court term opened the door to new challenges to even longstanding federal regulations and may have enduring effects on the ability of agencies to implement their preferred policies.
First, in Loper Bright Enterprises v. Raimondo, No. 22-451, 603 U.S. ____ (2024), a 6-3 opinion written by Chief Justice Roberts, the Supreme Court overruled Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). Chevron famously implemented a two-step framework for reviewing statutory interpretations by federal administrative agencies. Under that framework, courts first determined “whether Congress has directly spoken to the precise question at issue” and whether congressional intent is “clear.” Id. at 842. If congressional intent was not clear, such that “the statute is silent or ambiguous with respect to the specific issue,” courts gave controlling deference to the federal agency’s interpretation as long as it was “based on a permissible construction of the statute.” Id. at 843.
The Supreme Court overruled Chevron, holding that it contradicted the Administrative Procedure Act’s (APA’s) direction that “the reviewing court shall decide all relevant questions of law,” including “constitutional and statutory provisions.” 5 U.S.C. § 706. Tracing the history of federal judicial review from the Founding and Marbury v. Madison, 1 Cranch 137, 177 (1803), to the passage of the APA in 1946, see Loper Bright Slip Op. at 7-12, the Court said that § 706 codified “the traditional understanding” that courts review questions of law de novo, id. at 12-13, even while reviewing agency factfinding deferentially. Id. at 14. Going forward, then, the Court explained that in reviewing agency actions under the APA, courts should adopt the best interpretations of statutory provisions, as they see it, not merely decide whether agency interpretations are permissible. In making that determination, however, the Court recognized that the reviewing court can “seek aid from the interpretations of those responsible for implementing particular statutes” — i.e., the agency. Id. at 15–16.
Second, in Corner Post, Inc. v. Board of Governors of the Federal Reserve System, No. 22-1008, 603 U.S. ____ (2024), a 6-3 decision written by Justice Barrett, the Supreme Court addressed when a challenge to a federal regulation must be brought. Specifically, the Court answered when an APA claim “accrues” for purposes of the six-year statute of limitations for suits against the federal government. Corner Post Slip Op. at 1 (quoting 28 U.S.C. § 2401(a)). The Court held that a claim accrues when a plaintiff is injured by a final agency action, such as a rule promulgated by the agency, not when the final agency action occurs regardless of when the plaintiff was injured. Id.
The Court’s analysis was straightforward. Under Section 2401(a), civil actions must be “filed within six years after the right of action first accrues.” A claim generally “accrues” when the plaintiff has “a complete and present cause of action.” Meanwhile, to challenge a federal regulation under the APA, 5 U.S.C. § 702 requires a litigant to demonstrate it has been injured by the agency action, id. at 4, and 5 U.S.C. § 704 requires a final agency action, id. at 5. The Court thus held that an APA claim does not “accrue” and the statute of limitations does not begin to run until the APA plaintiff “suffers an injury from final agency action.” Id. at 6. The Court contrasted Section 2401 with other statutes of repose, which make certain regulations or agency orders final and unreviewable after a set period of time following the issuance of the regulation or order. Id. at 9.
The Court downplayed the policy concerns expressed by the dissent, stating that most administrative challenges occur when a regulation is passed and that if no authority upholding an agency action exists, then courts are well equipped to consider the merits of the newcomers’ challenges. Id. at 21. The Court acknowledged that, if policy concerns remained, Congress could change the law to govern when agency actions may be challenged under the APA. Id. at 22-23.
The interplay of these two decisions is likely to have wide-reaching effects on administrative law.
Most immediately, the decisions provide an opening for new challenges to federal regulations, including longstanding rules. As Justice Jackson highlighted in her Corner Post dissent, see Corner Post Slip Op., Jackson Dissent, at 23, it’s now possible that new objections to old rules may be entertained and determined de novo. And the consequence of those challenges (at least for now) can be a facial invalidation (or “universal vacatur”) of the regulation for all regulated entities, not merely the challenger. In the short term, this is likely to bring about some destabilizing changes in regulatory frameworks, as long-settled regulations are subjected to new and more searching judicial inquiry.
Over the long term, however, Loper Bright may bring more stability to regulated industries. For one, Chevron’s overruling means that, after a court has issued a precedential decision on the meaning of a statute, that decision will restrict an agency’s authority to interpret the statute differently. Under Nat’l Cable & Telecommunications Ass’n v. Brand X Internet Servs., 545 U.S. 967 (2005), as long as an earlier court decision had not held that statute was “unambiguous,” agency interpretations could still receive deference even for a contrary statutory interpretation. Id. at 984. But Loper Bright’s overruling of Chevron effectively overrules Brand X as well.
Loper Bright may also bring more stability to administrative law, even in the absence of a court challenge. The Court’s decision returns the standard for judicial review of agency interpretations to Skidmore v. Swift & Co., 323 U.S. 134 (1944). Under Skidmore, courts give an agency’s statutory interpretations varying weight depending on “the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.” Id. at 140. The Loper Bright Court repeatedly emphasized that, in considering an agency’s views, statutory interpretations that were adopted contemporaneously with the statute and have remained consistent over time are worthy of more respect than novel or inconsistent interpretations.
In both of these respects, then, Loper Bright is likely to curtail the agency practice of seismic rule changes every time a new presidential administration enters office. If the prior rule was subject to challenge, the courts’ interpretation will ossify the result unless and until Congress intervenes. And even if the prior rule was not subject to judicial review, the shift itself will undermine the persuasiveness of the agency’s views.
In the same vein, despite the Court’s refusal to provide agencies repose in Corner Post, the Court’s decision in Loper Bright will make litigation at the outset of a rule more important, because rules will likely have more staying power than they have for the past 40 years. And rules promulgated soon after Congress passes a federal statute will be more likely to remain in effect.
Still, several open questions remain.
First, in Loper Bright, the Court acknowledged that it was not scrapping all deference to agencies. Some statutes expressly authorize agencies to define particular statutory terms through regulations promulgated by the agency. Id. at 17 & n.5. Others allow agencies flexibility to determine what regulations are “appropriate” or “reasonable.” Id. at 17 & n.6. “When the best reading of a statute is that it delegates discretionary authority to an agency, the role of the reviewing court under the APA is, as always, to independently interpret the statute and effectuate the will of Congress subject to constitutional limits.” Id. at 17-18. The scope of those permissible delegations will no doubt be the subject of litigation — as will any constitutional limits on such delegations.
Second, in Corner Post, the Court left open whether the extended statute of limitations will apply to all types of regulatory challenges. For example, the majority acknowledged that entities that did not exist during the rulemaking process may not be able to establish the necessary injury to challenge an agency’s failure to provide sufficient notice of its regulation under the APA. See Corner Post Slip Op. at 21 n.8. That question will undoubtedly soon be the subject of litigation in the lower courts.
Third, the impact of Corner Post turns largely on the ability for parties to ask for and receive universal vacatur of agency regulations — as opposed to merely party-specific relief. It has been the settled rule for decades in the lower courts that APA cases can result in such facial invalidation of agency rules. But in recent terms, the federal government has pressed the Supreme Court to overturn that practice and restrict any relief to the parties to the litigation. Several justices have expressed some interest in that approach. See, e.g., United States v. Texas, 599 U.S. 670, 693-702 (2023) (Gorsuch, J., concurring in judgment) (questioning whether the APA authorizes vacatur in an opinion joined by Justices Thomas and Barrett). In his Corner Post concurrence, Justice Kavanaugh definitively stated his view on the availability of universal vacatur under the APA. See Slip Op., Kavanaugh Concurrence, at 1 (“[T]he APA authorizes vacatur of agency rules.”). But the majority decided the case only on the assumption that such relief may be appropriate. See Slip Op. 6 n.2 (“We . . . assume without deciding that vacatur is available under the APA.”).
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