Gravel2Gavel Construction & Real Estate Law Blog
It is instructive to review the Supreme Court’s record in its most recent term, concentrating on regulatory and administrative law cases, which are usually back-burner issues. But not this term.
The Supreme Court began the current term on October 7, 2024. The Court has already chosen many cases to review in the new term, and it promises to be as interesting as the 2023 term, which produced several significant rulings affecting regulatory and administrative law, chiefly the Loper Bright Enterprises ruling. Loper Bright overturned the Court’s landmark administrative law ruling of Chevron, USA v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).
The Background to Loper Bright
In 1984, the Supreme Court decided Chevron USA, Inc. v. National Resource Defense Council. (See 467 U.S. 839 (1984).) The unanimous decision, written by Justice Stevens, reversed then-D.C. Circuit Judge Ruth Bader Ginsburg’s ruling that set aside EPA’s Clean Air Act “bubble policy,” which was intended to provide regulatory relief from certain EPA permitting requirements.
Justice Stevens’ approach required the courts to defer to a reasonable and permissible agency interpretation of an ambiguous statutory provision that the agency was authorized to administer. He outlined a two-step framework which federal agencies and reviewing courts should employ to assess the agency’s interpretation: (a) Has Congress directly spoken to the precise question at issue? If it has, that is the end of the reviewing court’s inquiry. (b) However, if the court determines that the statute is silent or ambiguous, the court must defer to the agency’s interpretation of the law “if it is based on a permissible construction of the statute.” After a few years, it was recognized that the new Chevron “doctrine” had worked a revolution in administrative law and enhanced the power of federal agencies.” (See “Chevron, the making of an Accidental Landmark,” by Professor Thomas Merrill.)
As a backdrop to the Chevron ruling, it should be recalled that in the 1970s and 1980s, every Presidential administration was deeply concerned with the fairness and efficiency of federal departments and agencies. In addition, in 1978 the Supreme Court decided Vermont Yankee Nuclear Power Corp. v. NRDC, 435 US 519 (1978), which held that a federal court could not impose rulemaking procedures on a federal government agency. Historically, the D.C. Circuit had deeply involved itself in all sorts of routine federal agency proceedings, such as the FCC’s review of radio station program format changes. (See FCC v. WGN Listeners Guild, 450 US 582 (1981).) That practice now seems to have ended.
During the 2023 Term, the question of what to do with Chevron was presented in two cases: Loper Bright Enterprises v. Raimondo, a decision of the D.C. Circuit, and Relentless, Inc. v. Department of Commerce, from the First Circuit. The petitioners in both cases challenged a rule promulgated by the National Marine Fisheries Service, an agency of the Department of Commerce, which required some commercial fishing vessels to carry and pay for the services of a third-party observer. The petitioners complained, arguing that nothing in the Magnuson-Stevens Act authorized the promulgation and implementation of this rule, but the D.C. and First circuits utilized the Chevron framework to rule in favor of the government. The Supreme Court granted certiorari in both cases to address whether Chevron should be overruled or clarified.
Chief Justice Roberts’ opinion for the majority held that the decision in Chevron was flawed because it ignored the Constitution’s mandate that the judiciary must decide all questions of law, which is one of the basic provisions of the Administrative Procedure Act, Section 706, which “delineates the basic contours of judicial review of agency action.” Also, Chevron’s justifying presumption that Congress implicitly delegated this authority to the federal agencies, is dismissed as a “fiction.” The Court also notes that it had not relied on Chevron as a basis for any ruling on an agency interpretation since 2016. Next, regarding the argument that stare decisis requires the Court to continue adhering to Chevron despite its faults, the Court stated that as it has evolved, Chevron is unworkable and often unpredictable and is already festooned with many exceptions and conditions. The Court intimates that the 1944 case which established “Skidmore respect” for the use of agency experience may survive the demise of Chevron deference. (See Skidmore v, Swift & Company, 323 US 134 (1944).) As a result, the Court also believes that the thousands of cases decided under the auspices of Chevron will not be disturbed; they will be entitled to “statutory stare decisis.” (Some experts have concluded that 18,000 cases have cited Chevron since 1984.)
A few days after the Court overruled Chevron, it granted certiorari in several pending cases, vacated their judgments and remanded the cases to the appropriate federal appellate court for further proceedings after based on the Loper Bright ruling. Illustrating the scope and breadth of Chevron, these cases were remanded to the Fourth, Fifth, Eighth, Eleventh circuits, and the challenged rules had been issued by the disparate federal agencies: Immigration and Naturalization Service, the Department of Agriculture, the Federal Energy Regulatory Commission, the National Labor Relations Board, the Federal Mine Safety and Health Administration, and the Internal Revenue Service. However, it is far too soon to say whether Loper Bright will have the impact many observers have predicted.
The Court Wasn’t Finished
Within the space of a few days, the Court also issued significant rulings that: (a) interpreted and eased the standard six-year federal statutes of limitations governing appeals of final agency rules under the APA in Corner Post, Inc. v. Board of Governors of the Federal Reserve System; (b) confirmed the right to a jury trial under the Seventh Amendment in many civil administrative enforcement actions in SEC v. Jarkesy; (c) and provided injunctive relief in a complex EPA Clean Air Act proceeding in Ohio v. EPA.
In the Ohio case, the Court, in a 5-to-4 ruling, stayed EPA’s “good neighbor” rule which affects many states that may not be able to timely comply with a complex EPA Ozone new air quality standard while the D.C. Circuit weighs the merits of the petitioner’s arguments. (This relief has not been replicated in the new Term. Requests to stay EPA’s new mercury emission and methane emissions control improvements were not stayed.)
These four rulings, combined with the Loper Bright decision, have been somewhat unkindly described as a return of “the Four Horsemen of the Apocalypse,” and in truth the rulings have reordered the role of the federal judiciary in federal administrative law. However, it is important to note, remember the Court also issued significant rulings in other areas of the law in the 2023 Term, which we note below.
CONSTITUTIONAL RULINGS
National Rifle Association v. Vullo (decided May 30, 2024)
Here the Court held that the political pressures allegedly exerted by New York State’s Superintendent of Financial Services over the insurance entities it regulates in order to deny the NRA the ability to obtain “affinity” insurance from its members violated the First Amendment by coercing regulatory entities to transact their business relationship with NRA because of its new gun control. According to the Court, this was a clear case of “viewpoint discrimination.”
Consumer Financial Protection Bureau v. Community Financial Services (decided May 16, 2024)
The Court held that Congress’ enaction of a unique funding mechanism was consistent with the requirements of the Constitution. The Court, in a decision written by Justice Thomas, held that this new federal agency’s unique “funding mechanism” complies with the Constitution. According to the Court, the fact that the agency draws its annual funding directly from the Federal Reserve Branch and not through any individual annual appropriations bill does not violate the Appropriations Clause because a source of public funding is specified.
City of Grants Pass v. Johnson (decided June 28, 2024)
Reversing the Ninth Circuit, the Court holds that the City of Grants Pass, Ore., was well within its rights to enact local laws to restrict the growth of homeless encampments on public land. The Eighth Amendment to the Constitution simply does not apply to the enactment of such laws because they are not “cruel and unusual punishment.”
ADMINISTRATIVE LAW
Garland v. Cargill (decided June 14, 2024)
The Supreme Court held that attaching a “bump stock” to a rifle semi-automatic does not convert the rifle into a “machine gun” (whose possession is prohibited by federal law). The ATF’s newly promulgated rules interpreting the law to extend to buying such materials and explosions was not based on a correct ruling of the agency’s statutory authority.
Fischer v. United States (decided June 28, 2024)
This case concerned the Enron-inspired Sarbanes-Oxley Act. A section of that Act relating to obstruction of Congressional proceedings was employed by the government to prosecute many defendants who participated in the January 6, 2021, demonstrations and riots at the Capitol. The Court held that the law does not apply to such incidents.
FDA v. Alliance for Hippocratic Medicine (decided June 13, 2024)
This is a “standing case.” Reversing the Fifth Circuit, the Supreme Court ruled that the plaintiff doctors contesting the FDA’s approval of the drug mifepristone lacked standing to challenge this action. The evidence submitted by the plaintiffs was often too speculative to demonstrate real and substantial harm to them because of this FDA action.
SOCIAL MEDIA CASES
The Court is approaching these unique cases very carefully.
Lindke v. Freed (decided March 15, 2024)
Here, a state legislator blocked one of his constituents from his Facebook page. Is this decision subject to a challenge under 42 USC§1983? The Court rejects this argument, deciding that the defendant’s use of his own social media account is not actionable “state action.”
Moody, et al. v. NetChoice, LLC (decided July 1, 2024)
Here the Court reversed the Fifth Circuit’s affirmance of a new Texas social media law, which is concerned with the powers of social media platforms to moderate their content. (See the Texas Business and Commercial Code, Chapter 120, Social Media Platforms (2021).) Texas did not view the law as concerning itself with protected speech issues under the First Amendment, a position the Court rejected. However, the matter was remanded to the lower Courts for consideration of the First Amendment’s issues described by Justice Kagan in her opinion. In addition, neither the Fifth nor the Eleventh circuits correctly applied the standard for assessing a “facial challenge” to new legislation. (The Eleventh Circuit, unlike the Fifth Circuit, rejected a new state law purporting to regulate these social media platforms.)
Murthy et al. v. Missouri (decided June 26, 2024)
The Fifth Circuit affirmed the lower Court’s order enjoining federal executive branch officials from communicating with social platforms and expressing their displeasure with these platforms and the comments posted by their websites. Here, the Court reversed the Fifth Circuit Court’s opinion of the Texas law because the plaintiffs failed to demonstrate their standing to challenge these policies and actions. Also, more careful and specific evidence of harm was necessary.
Justice Alito filed a strong dissent, lamenting for Court’s refusal to review the government’s conduct which could be “the most important free speech cases to reach this Court in years.”
FEDERAL PROCEDURE
Starbucks Corporation v. McKinney (decided June 13, 2024)
The National Labor Relations Act prohibits employers from engaging in unfair labor practices, and the NLRB uses injunctions to obtain compliance. The Act allows the NLRB to seek a preliminary injunction while enforcement proceedings unfold, and to seek temporary relief in the federal Courts. The Court was asked to decide whether the traditional judicial tests that apply to preliminary injunctions also apply to the NLRB. The Court agreed. However, the Court’s precedent Winter v. NRDC, 555 U.S.7 (2008) must be followed.
SOME “TAKINGS” CASES
Sheetz v. El Dorado County, California (decided April 12, 2024)
Here, the petitioner, a California landowner, filed for and obtained a county building permit to construct a house on his property. The permit was granted, which required the petitioner to pay a “traffic impact fee” of more than $23,000. He unsuccessfully sued in the California state courts to recover this fee because it is an illegal “taking.” On appeal, the Supreme Court held that the Constitution’s Taking Clause can be the basis of a challenge to state permit exaction, and the case was remanded to the California courts for further review of this matter.
DeVillier v. Texas (decided April 16, 2024)
Reversing the Fifth Circuit, the Supreme Court held that the construction of a highway storm protection barrier in the middle of the highway which also serves as a “flood evacuation route” can be the basis for a Takings claim when property located to the south is protected but the northern half is not. Recognizing that a Texas statute provides a remedy, and that no court has ruled that the Takings Clause is self-executing, the lawsuit may proceed on the basis of the statute.
THE NEW TERM
So far, 40 cases have been selected for oral argument in the new term. None of them appear to pose fundamental challenges to the “administrative state.” Some important climate change controversies may be decided, such as the case of Abraham v. California.