THE END OF THE ADMINISTRATIVE STATE? PART II: CHEVRON HAD TO GO BECAUSE IT UNDERMINED THE ADVERSARIAL SYSTEM

In last month’s newsletter, I addressed one of the two cases the U.S. Supreme Court decided last term that involved significant restructuring of the authority of federal regulatory agencies to carry out their responsibilities.? SEC v. Jarskey involved the use of internal agency hearings to adjudicate violations of the law.? Despite my personal dislike of such proceedings, I concluded that the majority opinion finding such proceedings unconstitutional was poorly reasoned and unmoored from the reality of such hearings and the statutes they were enforcing.? Today, we address the other big administrative law case from last term, Loper Bright Enterprises v. Raimondo, Secretary of Commerce, Case No. 22–451 (decided June 28, 2024), which overruled Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984), thus ending the forty-year reign of Chevron deference to agency interpretations of ambiguous statutes.

?There has been a lot of commentary on Loper Bright and the end of Chevron deference, which I don’t intend to rehash here.? I suspect it is not quite the disaster for effective regulation that many foresee, nor will it completely undermine the administrative state as some of a certain political persuasion believe.? I will say that I think the majority opinion does an effective job of tracing how near dicta in Chevron evolved into a forty-year odyssey of the lower courts struggling to apply it, resulting in doctrinal incoherence and confusion.? And, at the end of the day, Marbury v. Madison seems to control: “It is emphatically the province and duty of the judicial department to say what the law is.”

?What I do want to focus on is something I have not seen in the commentary (although I can’t claim to have done an exhaustive search, so apologies in advance if I’m repeating something someone else has said): Chevron deference undermined the adversarial system, which is so fundamental to the common law system of justice.? While there are glancing references to this issue in the majority opinion, the issue came home to me in reading Justice Kagan’s dissent, in which she lists several cases as illustrative of seemingly technical issues that are more appropriate for an agency to resolve, with resulting deference by the courts.? This passage from the dissent is worth quoting in full:

? ·????? “Under the Public Health Service Act, the Food and Drug Administration (FDA) regulates “biological product[s],” including “protein[s].” 42 U. S. C. §262(i)(1). When does an alpha amino acid polymer qualify as such a “protein”? Must it have a specific, defined sequence of amino acids? See Teva Pharmaceuticals USA, Inc. v. FDA, 514 F. Supp. 3d 66, 79–80, 93–106 (DC 2020).

? ·????? “Under the Endangered Species Act, the Fish and Wildlife Service must designate endangered “vertebrate fish or wildlife” species, including “distinct population segment[s]” of those species. 16 U.S. C. §1532(16); see §1533. What makes one population segment “distinct” from another? Must the Service treat the Washington State population of western gray squirrels as “distinct” because it is geographically separated from other western gray squirrels? Or can the Service take into account that the genetic makeup of the Washington population does not differ markedly from the rest? See Northwest Ecosystem Alliance v. United States Fish and Wildlife Serv., 475 F. 3d 1136, 1140–1145, 1149 (CA9 2007).

? ·????? “Under the Medicare program, reimbursements to hospitals are adjusted to reflect “differences in hospital wage levels” across “geographic area[s].” 42 U. S. C. §1395ww(d)(3)(E)(i). How should the Department of Health and Human Services measure a “geographic area”? By city? By county? By metropolitan area? See Bellevue Hospital Center v. Leavitt, 443 F. 3d 163, 174–176 (CA2 2006).

·????? “Congress directed the Department of the Interior and the Federal Aviation Administration to reduce noise from aircraft flying over Grand Canyon National Park—specifically, to “provide for substantial restoration of the natural quiet.” §3(b)(1), 101 Stat. 676; see §3(b)(2). How much noise is consistent with “the natural quiet”? And how much of the park, for how many hours a day, must be that quiet for the “substantial restoration” requirement to be met? See Grand Canyon Air Tour Coalition v. FAA, 154 F. 3d 455, 466–467, 474–475 (CADC 1998).

·????? “Or take Chevron itself. In amendments to the Clean Air Act, Congress told States to require permits for modifying or constructing “stationary sources” of air pollution. 42 U. S. C. §7502(c)(5). Does the term “stationary source[]” refer to each pollution-emitting piece of equipment within a plant? Or does it refer to the entire plant, and thus allow escape from the permitting requirement when increased emissions from one piece of equipment are offset by reductions from another?? See 467 U. S., at 857, 859.”

?Dissent (Kagan, J.), slip op. at 5-6. Why are these issues entrusted to the “reasonable” interpretation of just one of the litigants, an administrative agency?? Isn’t the whole point of the adversarial system that each side puts on its case, the court decides any issues of law, and then the judge or jury finds the facts within that legal framework?? Courts decide scientific and technical issues all the time.? Patent cases often involve incredibly technical issues.? The whole point of Daubert motions is that a court must determine whether an expert opinion, often relating to technical matters, will be helpful to the jury.? Why do courts suddenly become dumb when an administrative agency is one of the litigants? ??

?Take a look at the Teva opinion cited above.? The District Court goes on for many pages of detailed factual background concerning the issue the dissent thinks is uniquely within the purview of the administrative agency.? Moreover, in finding that an agency interpretation is “reasonable” under Chevron deference in a scientific or technical area, the court, by definition, has to understand these issues. This reality under Chevron deference itself destroys the argument that deference is necessary due to the agency’s greater expertise. ?There can be no doubt that courts are capable of handling complex technical and scientific issues on an equal footing with the agencies that appear before them.

?In addition, in every case involving agency action, there is another party on the other side of that “v” from that federal agency, often with equal or greater expertise and the resources to present their positions to the courts.? Presumably, that party has the ability to present on issues as to whether an alpha amino acid polymer qualifies as a “protein,” or whether the Washington State population of western gray squirrels is a “distinct” segment, or what geographical area is an appropriate measure for hospital wages, or how you substantially restore the natural quiet over the Grand Canyon by restricting flights, or whether (as in Chevron itself) a stationary source for permitting purposes relates to an entire plant or individual equipment.? Why require a court to defer to one of the parties, reducing the other to procedural arguments about whether the agency’s decision met APA notice and comment requirements?

Chevron deference was, at bottom, fundamentally distrustful of the adversarial system and the ability of courts, through the presentation of clashing positions, to resolve complex questions.? Instead, it put a thumb on the scales of justice, predetermining that one of the litigants was entitled to deference as long as its views were reasonable.? This corruption of the adversarial process was fundamentally unfair.? Good riddance.