The Supreme Court’s Judicial Earthquake Will Shake the Administrative State
About the author: Cary Coglianese is the Edward B. Shils Professor of Law at the University of Pennsylvania.
“Chevron is overruled.”
With these three words, the Supreme Court last week created a legal earthquake. It abandoned one of the most widely cited decisions in the court’s history. In doing so, it dramatically signaled a shift in a 40-year understanding about the allocation of responsibilities between administrative agencies and courts over key decisions affecting people’s lives and livelihoods—ultimately giving more power to the federal judiciary.
The decision overturning Chevron was only one of several consequential high court rulings this past week. Together they have shaken the ground beneath the administrative state and shifted key decision-making power to the courts.
Chevron was never as well-known as Roe v. Wade, but its centrality to the legal justification of administrative government would be hard to overstate. Under Chevron, courts were instructed, as an initial matter, to determine whether a specific provision of a statute implemented by a federal agency was clear. If so, courts needed to enforce the statute no matter what the agency thought. But statutes often contain ambiguities or gaps, especially in the face of new technologies or scientific evidence. In those cases, Chevron told courts to give deference to the agency, as long as it could be fairly inferred that Congress had empowered the agency to decide the best way to understand the law.
When the Supreme Court formally disavowed Chevron deference last week in the case of Loper Bright Enterprises v. Raimondo, it instructed judges to make their own judgments about the “best” understanding of statutory law even in the face of statutory gaps and ambiguities. Instead of having a single agency’s considered and reasonable judgment prevail, the post-Loper Bright world will be one in which generalist judges across the country decide—sometimes with conflicting, even insufficiently informed conclusions about the best reading of a statute.
Loper Bright’s aftershocks will be felt by agencies across the federal government. Judges in courtrooms around the country will be the ones tasked with making decisions about the often complex, technical issues implicated by the work that Congress has entrusted to federal agencies.
What happens to 40 years of agency decisions made under the now-invalidated Chevron doctrine? The Loper Bright court anticipated this question to some degree and tried to limit the retroactive effect of its decision. It declared that, with respect to prior cases decided under Chevron, the “holdings of those cases that specific agency actions are lawful…are still subject to statutory stare decisis despite our change in interpretive methodology.”
This means that previous agency regulations, grants of licenses, and other agency actions cannot be undone just because Chevron has been overturned. But the court did not say that the statutory interpretations upon which those past actions were grounded must receive any precedential respect. Despite the court’s attempt to limit the collateral effects of overturning of Chevron, in the context of new licensing, permitting, and other agency proceedings, legal chaos seems likely to ensue. New litigation will arise challenging the foundations upon which past policies have been based and upon which existing economic and social orderings have been grounded. Other new decisions will compound Loper Bright’s unsettling effects on the administrative state.
On Monday, the court for all practical purposes eliminated any statute of limitations over disputes about agency actions. The case of Corner Post, Inc. v. Board of Governors of the Federal Reserve involved a dispute over a 2011 Federal Reserve regulation on debit card transactions. The regulation had been litigated soon after it was adopted and had been approved at that time by a federal appeals court. But a decade later, a convenience store that only opened its doors in 2018 decided to take the Federal Reserve to court again.
The question before the Supreme Court was whether a six-year statute of limitations prohibited the convenience store from challenging the regulation anew. The lower court, following longstanding precedents, ruled against the store, holding that the statute of limitations period had begun when the agency finalized its regulation. But the Supreme Court reversed. It held that the six-year statute of limitations begins whenever any business first can claim to have been injured by an agency action. If that business only comes into existence years, or decades, after an agency action it seeks to challenge, then that means the action can be challenged by the new business for up to six more years.
The court’s decision in Corner Post will surely spawn new litigation challenging many of what have previously been thought to be settled agency rules. Not only could these actions create a competitive disadvantage for businesses that have in good faith made investments based on past administrative rulings, but they might also make future administrative rulings less stable.
The upshot of Corner Post and Loper Bright will be to increase legal uncertainty and encourage litigation. In this way, they will also channel governing authority from agencies to the courts.
These two cases join with two other decisions handed down by the Supreme Court over the last week that signal a shift in governing power to the courts. In Ohio v. EPA, the Court interjected itself in the middle of an ongoing dispute over an Environmental Protection Agency rule, placing a halt on the rule even when the lower courts had yet to resolve the litigation—a highly unusual intervention. In Securities and Exchange Commission v. Jarkesy, the court ruled that the commission could no longer pursue civil penalties for securities fraud through administrative tribunals. These matters now needed to go to the federal courts. The Jarkesy decision will probably be most significant for what it will mean in the future for other agencies. Across the federal government, we will see actions previously handled through administrative tribunals headed to federal court.
The full effects of this past week’s legal earthquake cannot yet be assessed. But by shaking up prevailing governing practices, it is clear that the court has asserted itself—and the federal judiciary overall—closer to the center of government than it has been in at least a half century, if not longer. This raises important questions about institutional capacity of the courts to take on the additional litigation that will arise over the often complex issues handled by administration. If the Supreme Court cannot take on the additional workload needed to function effectively as the nation’s uber-administrative agency, this means that the lower courts, faced with an uptick in litigation, will become even more pivotal in Americans’ lives.
To some critics of the so-called administrative state, perhaps the disruption of the past week will seem just what they have long desired. But perhaps they must also be careful what they have wished for. A new, muscular posture of the Supreme Court toward agencies might seem good for business. But it may also spawn many new rounds of litigation and could produce key legal uncertainties that ultimately weaken the U.S. business climate—not to mention weaken government’s ability to act when needed to provide protections to workers and consumers.
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