By Ian Simrod, Senior Associate
Again, Congress has proposed a piece of legislation titled the “Separation of Powers Restoration Act” (“SOPRA”), which is Title II of the larger Regulatory Accountability Act.[1] SOPRA sets out to repeal the landmark Supreme Court decision Chevron U.S.A. v. NRDC by amending Section 706 of the Administrative Procedure Act.[2] In Chevron, the Court held that reviewing courts should defer to agencies’ interpretations of an ambiguous statute.[3] The main provision of SOPRA details that a reviewing court shall “decide de novo all relevant questions of law, including the interpretation of constitutional and statutory provisions, and rules made by agencies.”[4] When a court hears a case de novo, it decides the issues without a reference to assumptions and legal conclusions made by any previous court that heard the case.[5]
The Clean Air Act tasked the Environmental Protection Agency (“EPA”) with regulating “stationary sources.”[6] The issue before the Supreme Court in Chevron centered on how to interpret the term “stationary sources.”[7] Under the “bubble theory,” multiple smokestacks at one site were treated as one stationary source.[8] The opposing theory treated each smokestack as a separate stationary source, meaning that one single plant would have multiple stationary sources being regulated.[9] The energy industry wanted the EPA to utilize the bubble theory, as it would give the industry flexibility to compensate for high polluting smokestacks in its bubbles.[10] The EPA permitted the bubble approach insofar as allowing the states to define a stationary source as an entire plant for purposes of developing a state implementation plan to decrease air pollution.[11]
Justice Stevens, using the Chevron framework and writing for the Court, held that the EPA’s interpretation was reasonable.[12] When a court reviews an agency’s construction of a statute, it needs to address two questions.[13] Chevron first directs a court to determine whether Congress has spoken directly to the precise question at issue.[14] If the congressional intent is clear, there is no issue for the court to decide, and the congressional intent must be followed.[15] Essentially, the court determines whether the statute is ambiguous. If it is not ambiguous, the judicial analysis ends.[16] To determine if there is ambiguity, the Court states that the finder of law should use “traditional tools of statutory construction.”[17] If a court finds that there is ambiguity within the statute, the second step of the framework requires the court to determine whether the agency’s action under the statute is based on a permissible construction of the statute.[18] To determine what is permissible, the Court states, “The court need not conclude that the agency construction was the only one it permissibly could have adopted to uphold the construction, or even the reading the court would have reached if the question initially had arisen in a judicial proceeding.”[19] Broadly speaking, the first step of the framework asks whether the statute creates a zone of ambiguity, and the second step asks whether the agency’s interpretation is within this zone.[20]
Advocates for the repeal of Chevron believe its prescribed deference circumvents principles of separation of powers by giving the judiciary the option to avoid its role of reviewing the legality of various regulations and rules promulgated by administrative agencies and to avoid striking down arbitrary agency actions.[21] Furthermore, these advocates believe that judicial deference creates a lack of incentive for Congress to draft clear statutes.[22]
In contrast, supporters of Chevron believe agencies are more expert and more politically accountable than courts and are therefore better suited for the task of administrative statutory interpretation.[23] Chevron deference also helps reduce judicial overload and produce judicial efficiency.[24]
While Congress looks to remedy what it perceives as a problem, it has overlooked the judicial remedy that already exists. This remedy is the doctrine known as the “major question exception,” which was introduced in Food & Drug Administration v. Brown & Williamson Tobacco Corporation.[25] The doctrine essentially states that Chevron deference does not apply when major economic and political repercussions would result from statutory interpretation.[26]
In Brown & Williamson, the Food and Drug Administration (“FDA”) interpreted a statute giving it authority to regulate drugs—defined as “articles (other than food) intended to affect the structure or any function of the body”—as encompassing the authority to control nicotine as a drug through the regulation of tobacco products.[27] Justice O’Connor, writing for the Court, held that Congress did not authorize this assertion of authority over the regulation of tobacco.[28] She first noted that, with the FDA’s support, Congress had enacted six statutes regarding tobacco, premised on the view that the FDA lacked jurisdiction.[29] Justice O’Connor wrote, “Under these circumstances, it is clear that Congress’ tobacco-specific legislation has effectively ratified the FDA’s previous position that it lacks jurisdiction to regulate tobacco.”[30] She then stated that allowing the FDA to assert jurisdiction over a large part of the American economy would be a major transition.[31] Finally, she stated, “As in MCI,[32] we are confident that Congress could not have intended to delegate a decision of such economic and political significance to an agency in so cryptic a fashion.”[33] The Court essentially stated that when addressing major questions of economic and political significance, it is not enough to say that Congress could step in to correct the issue; the burden, instead, should be on Congress to issue a clear statement.[34] Fifteen years after its introduction, the major question exception was addressed and confirmed in King v. Burwell.[35]
The underlying issue in King v. Burwell was whether an Internal Revenue Service (“IRS”) regulation that extended tax credits to federal exchanges, authorized by the Affordable Care Act (“ACA”), exceeded the agency’s statutory authority.[36] The ACA required each state to establish an “exchange” so that people could purchase health insurance coverage, and if the state refused to establish an exchange, the federal government would establish one.[37] The ACA also required people to obtain minimum essential coverage, unless a person fell within a low-income exemption, or else the person would have to pay a penalty.[38] To limit the number of people falling under the exemption, the ACA provided tax credits.[39] Critically, the language of the ACA pertaining to these tax credits only referred to “state-based” exchanges.[40] Although only the state-based exchanges were mentioned, the IRS created a regulation that made the tax credits available to those enrolled in the federal exchanges.[41]
The Court held that Congress did not delegate authority to the IRS to determine whether the tax credits should be available to those enrolled in both the state and federal exchanges.[42] The language of the statute unambiguously provides that Congress intended for the tax credits to be available through both exchanges.[43] The Court refused to apply the Chevron deference framework and officially confirmed the major question exception by stating that, when there are major consequences to the interpretation of statutory language, Chevron deference does not apply.[44] Although the major question exception became official in this case, there is still ambiguity concerning what specific consequences would qualify as “major” to be an exception.
Overall, the Supreme Court has found a balance and solution to the issues of Chevron deference with the major question exception, which allows for judicial efficiency while respecting the principles of separation of powers. Judicial efficiency will remain because courts can defer to agencies on more trivial and less far-reaching policies while tackling regulations that have major political significance and economic impact. This doctrine also remedies the lack of incentive for Congress to draft clear statutes concerning major regulations because courts are now empowered to scrutinize these regulations. SOPRA is pork barrel legislating, insofar as the legislation is wasteful, because the Supreme Court has already foreseen the issues with Chevron deference and provided a solution for the doctrine’s inconsistencies.
[1] Separation of Powers Restoration Act of 2017, H.R. 76, 115th Cong. (2017).
[2] Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984).
[3] See id.
[4] H.R. 76.
[5] De Novo, LII: Wex Legal Dictionary, https://www.law.cornell.edu/wex/de_novo [https://perma.cc/HFD5-4HV6] (last visited Feb. 9, 2017).
[6] See Chevron, 467 U.S. 837.
[7] Id. at 842.
[8] Id.
[9] Id.
[10] See id.
[11] William Fox, Understanding Administrative Law 19 (6th ed. 2012).
[12] Chevron, 467 U.S. at 845.
[13] Id. at 842.
[14] Id.
[15] Id. at 842–43.
[16] See id. at 843.
[17] Id. at 843 n.9.
[18] Id. at 843.
[19] Id. at 843 n.11.
[20] See id. at 843.
[21] Jordan Rodriguez, Chevron Deference and the Proposed “Separation of Powers Restoration Act of 2017,” JDSupra (Feb. 2, 2017), http://www.jdsupra.com/legalnews/chevron-deference-and-the-proposed-93589/ [https://perma.cc/Q2XW-CCQN].
[22] Id.
[23] Id.
[24] Id.
[25] 529 U.S. 120 (2000).
[26] See King v. Burwell, 135 S. Ct. 2480 (2015).
[27] 529 U.S. 120, 126 (2000) (citing 21 U.S.C. § 321(g)(1)(C)).
[28] See id. at 161.
[29] Id. at 122.
[30] Id. at 156.
[31] See id. at 159–60.
[32] MCI Telecomm. Corp. v. Am. Tel. & Tel. Co., 512 U.S. 218 (1994).
[33] 529 U.S. at 160.
[34] See id.
[35] King v. Burwell, 135 S. Ct. 2480 (2015).
[36] See id.
[37] King v. Burwell, Oyez, https://www.oyez.org/cases/2014/14-114 [https://perma.cc/4NR5-A6DN] (last visited Feb. 9, 2017).
[38] Id.
[39] Id.
[40] Id.
[41] Id.
[42] See King v. Burwell, 135 S. Ct. 2480 (2015).
[43] Id. at 2492.
[44] Id. at 2488–89.