A series of Supreme Court decisions weakening the power of federal agencies are poised to make it harder for the government to protect the public from abuses and dangers from fraudulent investment funds to air pollution – all while making it easier for well-funded industry groups to ask Trump-appointed judges to upend regulations, according to legal experts.
In Loper Bright Enterprises v. Raimondo, the 6-3 majority opinion put a final nail in the coffin for the decades-old Chevron doctrine that has helped federal agencies’ interpretations of – often highly complex and technical – statutes stand up in court.
In SEC v. Jarkesy, another 6-3 opinion invalidated the Security and Exchange Commission's ability to enforce securities fraud laws by no longer allowing the SEC to impose civil penalties without a jury trial.
In Corner Post v. Board of Governors of the Federal Reserve System, the dissent warned the majority that its 6-3 opinion will allow industry groups to launch shell companies to fight governmental regulations imposed decades ago without any time limit.
And in Ohio v. EPA, a 5-4 majority opinion blocked the EPA’s interstate plan to reduce air pollution from upwind states. Justice Amy Coney Barrett and the liberal justices dissented, criticizing the majority for basing its decision on the EPA’s alleged failure to respond to one “vaguely” worded comment from a trade association – out of thousands of pages of comments from other groups.
The decisions follow decades of opposition from industry and conservative groups, including The Heritage Foundation, which have hailed the rulings as lobbing a powerful blow against the administrative state and governmental overreach. Leading opponents include billionaire Republican donor and real estate tycoon Harlan Crow — the co-founder of the Club for Growth who has provided free luxury trips to Supreme Court Justice Clarence Thomas, on top of covering Thomas' relative's private school tuition and buying property from Thomas.
“This has been part of a years-long campaign to erode principles of agency authority on many, many fronts,” said Kevin Poloncarz, a partner with Covington & Burling LLP who co-chairs the firm's environmental and energy practice group. “It is a bit overblown and hysterical to say that: 'Oh my goodness, we just woke up and the administrative state died.' It's been a years-long campaign, a decades-long campaign.”
In particular, the Loper Bright ruling has grabbed headlines as the culmination of years of lobbying and legal battles led by conservative and industry groups and Republican attorneys general aimed at reducing the EPA’s power.
“There’s a whole movement out there that is led by the Federalist Society and has been very successful at getting judges and justices installed to positions where they've been able to reshape the judiciary over the past decades," Poloncarz said.
He added: “These four cases in the last two weeks coming out of the court all represented a different front in this battle – between a view of a strong administrative agency who has authority to promulgate regulations and this court’s view that they won't defer to an agency's interpretation. And they won't hesitate to jump in and stop an agency dead in its tracks if they get a whiff that something is amiss."
WEAKENING POWER OF REGULATORS
Multiple legal experts told Salon that the decisions hamstring the Congressionally-granted power of federal agencies to root out wrongdoing and deal with complex and weighty issues — while making it easier for opponents to fight regulations in court, and harder for Congress to write laws that will hold up in court.
“The Supreme Court has pushed very strongly to weaken public protections and to prevent public agencies from protecting the public against dangers from industry,” Georgetown Law professor David Super said.
University of Baltimore Law School Professor Andrew Ziaja said that laws passed by Congress frequently have phrases that aren’t explicitly defined and that federal agencies have instead interpreted.
“I think if we say administrative agencies can't help Congress shoulder some of that burden, the work just won't get done, and we'll end up with worse and worse regulation,” Ziaja said. “We'll end up with sort of more and more dangerous products, dangerous financial products, an unsafe environment and so forth. And Congress just will never sort of catch up to all of the demands on its time.”
He stressed: “The general public should care, because we all want to drive safe cars and live in a safe environment, and be able to trust their banks are giving us a fair shake. I mean, it's just too much for Congress to do by itself. And I think we'll have to learn that lesson all over again, I think, before the pendulum swings in the other direction.”
New York University School of Law Professor Peter Shane said that what the court is "really doing is hamstringing both elected branches and signaling to lower court judges in general — if you want to be tough on the agencies, we have your back."
Shane said the decisions give more fodder to Trump-appointed federal judges who are sympathetic to the conservative movement's aims.
"We have 200 or so Trump-appointed judges on the courts," Shane said. "We have litigants who have been very sophisticated about picking districts where they are sure to get a Matthew Kaczmarek in Texas, or this guy, [Judge James] Cain in Louisiana, who are really going to push the limits of what's plausible legal interpretation if they don't like whatever policy the Biden administration is pursuing."
Shane warned: "I just think when lower court judges who are skeptical of regulations to begin with see the Supreme Court acting in this way, they'll likely become bolder, being similarly aggressive."
Shane said the Roberts Court has a "very superficial understanding of the separation of powers."
"What we're doing is making sure that it's Congress that gets to make the policy decisions, not the agencies," Shane said.
And Shane said the rulings will make it harder for Congress to come up with language for statutes that will hold up in court while being flexible enough to protect the public from unforeseen problems.
"In order to do that, the language has to be somewhat ambiguous," Shane said.
Super called the Jarkesy ruling particularly "shocking."
"To sweep away so much of the consumer protection structure that has been built up over half a century and has protected against all sorts of horrible abuses, prevented countless people from being wiped out financially, and now that's all gone," he said. "It's shocking to me that the court would sweep with such a broad brush."
In the Jarkesy ruling, the majority opinion focused on arguing that the SEC’s antifraud provisions reflect common law fraud tried in the late 18th century – a move that Super said is “very subjective.”
“The laws changed enormously in more than 200 years, and you can analogize almost anything to what was happening in the 1790s to some extent, but almost nothing is a perfect fit,” Super said. “So the court has effectively opened this up to a great deal of subjectivity.”
Super warned the ruling could “protect many wrongdoers from being effectively fined.”
“Agencies simply don't have the resources to initiate complicated civil jury trials every time someone releases unsafe products onto the market or commits consumer fraud,” Super said. “And preventing agencies from issuing fines in many of these situations will leave the public much less protected.”
LAWSUITS ALREADY BEING FILED
Already, lawsuits citing the new Supreme Court rulings — particularly Loper Bright — are making their way through the courts.
Shane said Loper Bright's particular impact could be limited, given the years-long trend toward reducing power of administrative agencies.
"Whether that decision by itself will make much of an incremental impact in the number of times agencies lose in front of courts — it's harder to predict," he said. "My prediction is that these cases are going to have less of an impact on who wins and who loses in court, and more of an impact on how agencies approach regulation in the first place. I think regulation agency lawyers are going to be more skittish about signing off on regulations."
He added: "I think Loper Bright's bigger significance is saying to the people who have been pushing for a more right-wing direction on the court, it's sort of like waving a flag saying, 'Hey, we won on this one.'"
In northern New Jersey, a healthcare network sued the U.S. Centers for Medicare and Medicaid Services hours after the Loper Bright decision, arguing that “irrational and unlawful” agency interpretations have led to hospital underpayment.
“With the Chevron deference overruled, courts may no longer routinely uphold the decisions of agencies in technical fields simply because of the complexity of the statutory schemes they oversee,” reads the lawsuit, according to The Bergen Record.
Also that day, in Texas, Trump-appointed federal judge Sean Jordan cited the Loper Bright decision in his ruling that blocks a federal overtime rule opposed by business groups. Jordan’s ruling was temporary, and limited to state workers.
And in the following days, another Trump-appointed federal judge, Ada Brown, cited the Loper Bright decision as she granted a preliminary injunction halting Federal Trade Commission enforcement of its new non-compete rule – though the decision’s impact is only limited to the parties involved in the lawsuit.
Meanwhile, the 5th Circuit Court of Appeals is hearing an appeal in which Utah, citing the Loper Bright ruling, wants the court to overturn a decision concerning the Department of Labor’s rules for retirement plan investments.
“What I see in likely filings is like a little victory lap by those who've long been pushing for erosion of the power of administrative agencies and ways of getting around the Chevron doctrine,” Poloncarz said.
Ziaja said the Loper Bright ruling reflects the “general uneasiness or uncomfortableness with the power of administrative agencies and a desire by certain judges to consolidate the power exercised by those agencies in the court system.”
“It seems kind of overblown in the sense that you know unelected bureaucrats are still subject to changes in administrations, changes in the political sort of output of Congress, changes in the courts and so forth,” Ziaja said. “They were never really out there acting alone, sort of unrestrained. But rather than having a sort of a broad based pyramid, things look now like a very narrow skyscraper, and the power is really consolidated in the penthouse.”
IMPACT ON EPA
Experts say that the Loper Bright decision is expected to have the biggest impact for the EPA and its environmental regulations.
“Agencies like the EPA are going to have to go back now and review all of their existing regulations that were issued, relying on Chevron to see whether those regulations can still stand under the law as it currently exists,” Ziaja said.
Poloncarz said that the Supreme Court hasn’t applied Chevron deference since 2016.
Under the Chevron deference, if a Congressional statute was ambiguous, a court would defer to an agency’s interpretation if it deemed it permissible.
“Agencies have been preparing for its demise,” he said. “Agencies have not been crafting rules expecting that they're going to get deference.”
But he said lower courts have cited Chevron deference – setting up legal battles that ended up in the Supreme Court.
“It just took the right vehicle, and this one concerning fishing vessels, seemed to be the right one,” Poloncarz said.
Shane said the Loper Bright ruling follows the 2022 ruling in West Virginia v. EPA, when the Supreme Court decided that the EPA lacks the authority to regulate greenhouse gas emissions – a ruling that experts say effectively quashed the administrative state.
"It really already put a kind of thumb on the scale, against the agency, if the agency was trying to do something, as the Court said, politically and economically significant based on broad statutory wording, as opposed to a very clear statutory authority," Shane said.
The court created the “major question doctrine,” which said that agencies had to point to clear congressional authority to tackle “extraordinary” issues such as climate change.
Shane said the Supreme Court has been "sufficiently vague" about how courts should apply the major question doctrine.
Ziaja added: “With the major questions doctrine in hand, the court already had all of the tools it needed to circumvent Chevron without formally overturning it."
And Super said the opinion did not "purport to overturn any of the decisions that agencies won under Chevron."
"Let's say the EPA decided to do something 15 years ago," Super said. "It got upheld under Chevron step two, that rule is still valid. What's not so clear is what happens if the agency says: 'Okay, now you want to have another rule using the same section in the statute that was upheld.' Are the courts going to follow the earlier case?"
Poloncarz said gridlocked Congress has not amended the EPA to provide it more clear authority since the 1990s.
“That’s why this has become a left-versus-right cause in the U.S.,” he said.
He said the Supreme Court has used the ruling to aggrandize power.
“This is a doctrine against judicial humility,” Poloncarz said. “It's the judges saying we know better than unelected officials who are appointed at agencies. They basically are saying for four decades courts, the way government has functioned and has relied upon this doctrine was all misguided and wrong.”
Shane agreed, saying: "The Supreme Court has taken the position, which sounds straight out the 19th century, that statutes only have one best reading, no matter how inscrutable they've seen. And you know, judges are better than agencies at figuring out what that one best reading is."
Super said courts will "feel much more free to apply their own interpretations to the law.”
“And as we've seen in some cases coming out of Texas, some very exotic interpretations are possible, if you are determined to reach a particular result," Super said.
AN OVERLAPPING IMPACT
And Super said the administrative law rulings – including Corner Post, which took aim at a six-year statute of limitations for suing the U.S. – combine to sow confusion and encourage litigation.
Super said the Supreme Court’s decision in Ohio v. EPA “encourages and rewards people for nitpicking errors that agencies made in putting out regulations.”
On top of that, Super said Corner Post says: "You don't have to worry just about the current administration. If you think Richard Nixon messed up, you can organize a new entity that was not affected by these regs because it didn't exist back then, have this entity buy a token amount of whatever business it is that's being regulated, and then immediately sue.”
In the liberal justices’ dissent on Corner Post, they noted that the Corner Post truckstop and convenience store in North Dakota at the center of the litigation represents the sort of “gamesmanship” that statutory limits aim to prevent.
“In the majority’s telling, this is about a single “truckstop and convenience store located in Watford City, North Dakota. Not quite,” reads the dissent.
Two trade groups representing petroleum marketers and retailers initially filed the lawsuit in 2021 over a decade-old Federal Reserve Board debit-card-fee regulation. The trade groups’ complaint later added Corner Post to an amended lawsuit that the dissent said “was not new or in any way distinct” from the original.
Super said the Corner Post decision will create “enormous chaos for regulated industries.”
“The whole point of statutes of limitations is to allow people to count on what is the law and what isn't the law,” Super said. "Now we'll never know."
Super said that chaos could fuel a push for Congressional action.
“I think the possibility of overruling Corner Post legislatively may be greater than some of the others,” Super said. “The banking industry has got to hate that. The auto industry's got to be unhappy about that. A lot of industries that understand there will be regulations and just want to know what they are so they can plan are going to hate it.”
