This week, in Lopez v. Bondi,the Ninth Circuit denied a petition for rehearing of a panel decision upholding the Board of Immigration Appeals’ (“BIA”) conclusion that petty larceny convictions are “crimes of moral turpitude.” Judge Bumatay authored a dissent. While Lopez is ostensibly an immigration dispute, it may have much broader administrative law implications because of how the panel majority applied Loper Bright to the specific statutory interpretation questions at issue in that case. As Judge Bumatay put it:“This case is of rare importance. As the first to interpret Loper Bright in the immigration context, Lopez will govern hundreds of cases on the Ninth Circuit’s docket. But even more, this case will infect other areas of law—no doubt spreading to our broader administrative-law jurisprudence.” Underscoring the significance of the panel’s misapplication of Loper Bright, Professors Michael Kagan and Christopher Walker filed an amicus brief in support of rehearing en banc (which Judge Bumatay cites).

Judge Bumatay forcefully argues that Lopez’s reasoning is based on a fundamental misreading of Loper Bright that “conflicts with” that landmark decision for three reasons that independently justify en banc review: “First, Lopez favored agency deference rather than the best reading of the statute. Second, Lopez applied agency deference even without any statutory ambiguity. And third, Lopez refused to revisit Chevron-based precedent that is clearly irreconcilable with Loper Bright.”

Loper Bright “announced a sea change in how federal courts must treat the Executive Branch’s interpretation of the law,” Judge Bumatay wrote, emphasizing Loper Bright’s core teaching that “[c]ourts must independently interpret statutes and must not defer to an executive agency’s legal interpretations.” Loper Bright, of course,ended the Chevron regime, under which courts would give binding deference to agency statutory interpretations under certain circumstances. In the dissent’s view, “the panel took the extraordinary step of resurrecting Chevron under the alias of “Skidmore deference.” It did this by essentially putting the cart before the horse, jumping to whether the BIA’s conclusion that Mr. Lopez’s criminal convictions were “crimes of moral turpitude” was entitled to Skidmore respect, instead of first ascertaining for itself the best reading of the statute, as Loper Bright now requires. In this way, the dissent continues, “the panel abdicated the judicial role and just applied Chevron deference by another name.”

The dissent also took issue with the panel’s decision “to ‘afford’ the BIA’s interpretation of the” law ‘Skidmore deference,’” even though the plain language of the statute “forecloses Lopez’s [pardon waiver] argument.” In other words, even though the panel found that the statute was unambiguous, it still granted the agency’s interpretation respect under Skidmore. In the dissent’s view, “This makes little sense. If the statutory text resolves the matter unambiguously, then we stop there. We don’t then check whether the Executive branch agrees with the plain meaning. . . . So deference and respect have nothing to do with this question.”

Finally, the dissent suggested rehearing en banc was warranted because “the panel misread Loper Bright to preclude three judge panels from revisiting circuit precedent based on the now-defunct Chevron doctrine.” This portion of the dissent brings to the surface an issue that has been causing confusion in the lower courts: the proper scope of statutory stare decisis for past cases decided under the now-repudiated Chevron doctrine. The Supreme Court said in Loper Bright that in overruling Chevron, it “d[id] not call into question prior cases that relied on the Chevron framework. The holdings of those cases that specific agency actions are lawful—including the Clean Air Act holding of Chevron itself—are still subject to statutory stare decisis despite our change in interpretive methodology.” To date, lower courts have reached differing conclusions on whether this passage refers to the specific agency decision upheld under Chevron or, alternatively, the agency interpretation of the statute that was upheld under Chevron. In other words, does statutory stare decisis travel with the specific agency decision or the agency’s interpretation of the statute that was used to justify the agency decision upheld under Chevron. Judge Bumatay interprets this passage in another way that may be worth paying attention to, writing that “Loper Bright’s statement about ‘prior cases’ refers to its prior cases—not ours.” The implication of this reading of Loper Bright appears to be that at least under the Ninth Circuit’s decision in Miller v. Gammie, lower court precedent upholding agency decisions under Chevron is not entitled to statutory stare decisis, which, if ultimately accepted, may be a big deal.

In the dissent’s view, the panel misread and misapplied the statutory stare decisis passage in Loper Bright in at least two ways. “First, Loper Bright was a clear ‘intervening United States Supreme Court decision’” under Miller that required the panel to revisit Chevron-era circuit precedent without granting it stare decisis effect. The dissent argued that “the panel overread” the sentence in Loper Bright on stare decisis “to preclude lower courts from revisiting lower-court precedents that relied on Chevron.” To the contrary, “any Ninth Circuit precedent that relies on Chevron to defer to an agency’s interpretation of the law is ‘clearly irreconcilable’ with Loper Bright.” The dissent continued: “neither Loper Bright nor our stare decisis factors precluded us from revisiting and overruling Chevron-based precedent.” Second, the panel’s declaration that only a new agency interpretation permits us to revisit Chevron-based precedent lets the Executive branch—not the courts—dictate the interpretation of the law.” In the dissent’s view, that approach “defies sound logic— and worse still, it resurrects Chevron.”

Judge Bumatay sums up where the dissent parts ways with the panel opinion’s application of Loper Bright thus: “Loper Bright represented one of the most dramatic changes in how courts should do statutory interpretation. Even so, Lopez acts as if nothing has changed.” That captures well why the panel opinion should not be allowed to stand. And for those who are interested the debate over Loper Bright’s impact on statutory interpretation, administrative law, and the power relationship between courts and agencies, Judge Bumatay’s thoughtful dissent from denial of rehearing en banc in Lopez is worth reading. It will be interesting to see whether Mr. Lopez seeks Supreme Court review on one or more of the Loper Bright implementation questions and whether the Court grants cert.

AFP Foundation Senior Policy Counsel Ryan Mulvey joined Montana Talk’s Aaron Flint live from the Western Caucus Foundation meeting to discuss Loper Bright.

Featuring:

• Ryan Mulvey, Senior Policy Counsel, AFP Foundation
• Graham Owens, Policy Fellow, Americans for Prosperity
• Aaron Flint, Host, Montana Talks

Interview starts at 28:20.

Bloomberg Law’s UnCommon Law podcast finishes its series on the “story behind the fishing industry’s Chevron doctrine challenge.” This episode is on: “After Loper Bright, Congress Weighs Sweating the Small Stuff”

In this season finale, we hear from a current and a former senator on opposite sides of the aisle who both argue that Congress must reclaim its constitutional role. They agree that decades of delegating authority to agencies has weakened the legislature, but they diverge on what should happen next. Should lawmakers strip out vague catchall words to limit agency discretion? Or should Congress work more closely with agencies to ensure workable, expert-informed legislation?

Featuring:

• Sen. Eric Schmitt, R-Mo.
• Former Sen. Heidi Heitkamp, D-N.D.

A recent cert petition asking the Supreme Court to vacate the Sixth Circuit’s decision in Tennessee v. Kennedy, and remand with instructions to dismiss the case as moot under United States v. Munsingwear, highlights an important Loper Bright implementation question that the Court may need to resolve in a future case: the scope of statutory stare decisis protection of agency interpretations of statutes that were upheld by courts under the Chevron regime. (Recasting Regulations previously discussed this case here.) 

In overturning Chevron, the Loper Bright Court granted some protection to prior agency actions upheld under the Chevron regime. The Court went out of its way to make clear that Loper Bright “do[es] not call into question prior cases that relied on the Chevron framework” and that “[t]he holdings of those cases that specific agency actions are lawful . . . are still subject to statutory stare decisis[.]”   

As Tennessee v. Kennedy illustrates, there appears to be some confusion in the lower courts as to whether only the specific agency decisions upheld under Chevron are entitled to statutory stare decisis or, alternatively, the agency’s statutory interpretation itself receives that protection. The panel majority’s revised opinion concluded that “a ‘specific agency action’ attaches to an agency’s particular construction of a statute,” citing Loper Bright. But in dissent, Judge Kethledge persuasively explains that that passage of Loper Bright is best read to limit statutory stare decisis protections to the particular regulations that were upheld under Chevron.  

The answer to that question matters because if statutory stare decisis travels with the agency’s statutory interpretation, it would allow a form of de facto Chevron deference to continue to shield those interpretations indefinitely. This would, to some extent, limit Loper Bright’s core holding that courts must independently interpret statutes including in cases involving agencies.  

This cert petition is worth watching. And it will be interesting to see if the Court GVRs Tennessee v. Kennedy under Munsingwear or allows that decision to remain on the books in the Sixth Circuit. 

Bloomberg Law’s UnCommon Law podcast continues its series on the “story behind the fishing industry’s Chevron doctrine challenge.” This episode is on: “Chevron Deference Is Dead. Is the Administrative State Still Alive?”

In just the first six months after Loper Bright was decided, courts cited the case more than 400 times, according to a Minnesota Law Review article. Lower federal courts invalidated new agency rules almost 84% of the time. This has affected policies ranging from net neutrality to labor regulations to environmental protections. We delve into how Loper Bright has already reshaped American regulatory policy.

Featuring:

• Helgi Walker, partner at Gibson Dunn and co-chair of their administrative law and regulatory practice group
• Rebecca Rainey, senior labor department reporter for Bloomberg Law
• Cary Coglianese, professor at the University of Pennsylvania Carey Law School and director of the Penn Program on Regulation

The Supreme Court’s decision in Loper Bright was a landmark victory for the rule of law, due process, and the separation of powers. But it was not the only important administrative law decision in the 2023 Term. Following Loper Bright, Corner Post, Inc. v. Board of Governors of the Federal Reserve System opened up the courthouse doors to people newly harmed by old regulations, holding that Corner Post’s 2021 challenge to a 2011 debit-fee regulation known Regulation II was timely because the APA’s six-year statute of limitations starts to run when a party is first harmed by the regulation—as opposed to when the agency promulgates it—and Corner Post didn’t open for business until 2018. Corner Post’s challenge to the Fed’s regulation was then remanded to the district court to decide on the merits. This time, Corner Post also had the benefit of Loper Bright’s instruction that courts must independently interpret statutes without granting deference to an agency.  That appeared to matter.

District Court Ruling

Last week, on remand the district court granted Corner Post’s summary judgment motion, applying Loper Bright and concluding that Regulation II was beyond the agency’s power and thus unlawful. The result may have been different under Chevron. As the district court put it, “[w]hen this litigation began roughly fourteen years ago, the Parties were subject to the mire of Chevron deference.” Indeed, as the district court observed, the D.C. Circuit found in related litigation that the Fed’s debit-fee regulation rested on a “reasonable” interpretation of the statute that passed muster under Chevron.

But as the district court emphasized, Loper Bright “reinstituted courts’ proper role in statutory interpretation.” Quoting Marbury, the court added: “Courts—not agencies—emphatically and completely fill the role of saying ‘what the law is.’” And after Loper Bright, “[p]urported statutory ambiguities no longer change the legal calculus for how courts ought to review agency action.” The opinion’s discussion of Loper Bright’s impact on how courts interpret statutes and restored the judicial role under Article III to independently interpret the law continued. Citing and quoting Loper Bright, the district court observed that “[r]egardless of whether intentionality or lapse of mind created the supposed ambiguity, only courts hold the expertise and constitutional permission to resolve it. Accordingly, this Court—and not the Board—will determine the ‘best’ interpretation of the Durbin Amendment because courts hold the monopoly ‘[i]n the business of statutory interpretation’ and delineate the boundaries of an agency’s authority.”

Against this backdrop, the district court rejected the Fed’s argument that “Congress drafted the Durbin Amendment with the intention that the Board’s statutory interpretation would be reviewed deferentially,” agreeing with Corner Post that this was simply an attempt at “repackaging the defunct-Chevron deference under a different name.” It found that while Congress granted the Fed some discretion to regulate debit-card fees, the Durbin Amendment was not a “blank check” allowing the Fed to set whatever fees it wanted, rejecting the agency’s appeals to the statute’s purpose to justify its power claim. As the district court described it, “[t]he Durbin Amendment is akin to a funnel—it starts with a broad purpose and narrows to particular boundaries for the Board’s actions.” And the broad general and introductory statutory language is “not the Board’s permission slip to draft regulations with presumed deferential review.” Applying traditional canons of construction and independently analyzing the statute’s plain language and structure, the district court concluded that Regulation II exceeded the Fed’s authority under the Durbin Amendment and vacated it, finding it unnecessary to address Corner Post’s major questions and arbitrary and capricious arguments and staying its order pending appeal.

Reforms Making an Impact

Corner Post’s saga and recent victory illustrates that after Loper Bright and Corner Post ultra vires regulations reflecting agency statutory interpretations that could, at best, only be defended as “reasonable” under the now-discredited Chevron regime are not immune from judicial scrutiny merely because they have been on the books for a long time. Together, Loper Bright and Corner Post provide everyone harmed by stale regulations they believe to be unlawful with a meaningful pathway to get relief without first having to violate those regulations and risk an enforcement action or filing a rulemaking petition.  

In Prichard v. Long Island University, a U.S. District Court for the Eastern District of New York relied on Loper Bright v. Raimondo to invalidate an Equal Employment Opportunity Commission (EEOC) regulation that had allowed the agency to issue “right to sue” notices before 180 days had passed.  The decision made clear that EEOC regulations should not be given Chevron deference and that courts must exercise independent analysis in interpreting and applying EEOC regulations.

The court explained that “Title VII [of the Civil Rights Act of 1964] directs the EEOC to issue a RTS [Right to Sue] letter in two circumstances: if the EEOC dismisses the case or if 180 days have passed since the filing of a complaint and the EEOC has not completed its investigation.”  In this case, the EEOC had not dismissed the case but nevertheless issued the RTS notice after only 57 days.  In doing so, it relied on an EEOC regulation that allowed it to issue RTS notices when it has “determined that it is probable that the Commission will be unable to complete its administrative processing of the charge within 180 days from the filing of the charge.”  29 C.F.R. § 1601.28(a)(2).

The court noted that the circuits were split on whether this regulation was valid.  Those that had upheld it had done so by finding “the statute ambiguous and deferring on to [sic] the agency’s interpretation under Chevron.”  Explaining that, after Loper Bright, Chevron deference was no longer appropriate and therefore “[c]ourts, not agencies, determine statutory meaning,” the court found “the EEOC’s rule authorizing early RTS letters conflicts with the statutory text” because the regulation granted the EEOC additional authority beyond the statute’s two express conditions for issuing the notice (dismissal of the case or passage of 180 days).

Notably, in rejecting the plaintiff’s counter-argument, the court relied heavily on Loper Bright:

[Plaintiff’s] assertion that deference is due the EEOC’s interpretation of the statute effectively urges this court to operate in a parallel universe in which Loper Bright had been decided the other way. No case that [Plaintiff] cites (or that the Court has identified) sided with the EEOC on textual grounds without according deference: they either deferred to the agency pre-Loper Bright, or relied primarily on policy considerations. [Citations omitted]  Neither approach now suffices to overcome the plain text of the statute.

Following her appearance at the HSGAC hearing on the future of Loper Bright, former OIRA Administrator Susan Dudley had a series of recommendations for how Congress can reassert itself and fulfill its constitutional role.

“First, legislation should recognize that while scientific facts are a necessary element of good policy design, they are almost never sufficient.”

“Second, Congress should provide agencies with clear guidance on how they should weigh competing considerations.”

“Third, … Congress should require agencies to evaluate their regulations periodically to determine how effective they are at achieving legislative goals, and to identify needed revisions both to the regulations and the underlying statutory authority.”

“Fourth, to support these efforts, Congress itself needs more resources[.]”

Read the full piece on Forbes here.

On July 23^rd, in Zimmer Radio of Mid-Missouri v. FCC, the Eighth Circuit applied the Supreme Court’s decision in Loper Bright to a dispute over the FCC’s quadrennial review of its media ownership rules in a way that highlights a few key themes in Loper Bright statutory interpretation cases. 

• Courts generally review an agency’s interpretation of a statute (a legal question) de novo, independently fixing the metes and bounds of the agency’s power and discretion using traditional canons of interpretation.  

• An agency’s contemporaneous and longstanding interpretation may shed light on a statute’s best reading. 

• Subject to constitutional limits, where a statute is best read to delegate discretion to an agency, how the agency exercises that discretion under the deferential arbitrary and capricious standard so long as the agency stays within the boundaries set by the statute, particularly for agency decisions that turn on factual findings, policy decisions, and/or implicate technical expertise.  

Background on the FCC Order

Under Section 202(h) of the Telecommunications Act of 1996, every four years the FCC is statutorily required to review its rules. Congress instructed that, as part of that review, the FCC “shall determine whether any of such rules are necessary in the public interest as the result of competition” and “shall repeal or modify any regulation it determines to be no longer in the public interest.” After conducting its 2018 review, the FCC decided to keep all of those rules on the books and tighten one of them. Petitioners challenged the FCC’s 2023 Order on multiple grounds, some of which elucidate Loper Bright’s impact.  

Eighth Circuit Decision on Agency Discretion

In rejecting the petitioners’ argument that the FCC’s 2023 Order’s narrow definition of “market” was inconsistent with Section 202(h), the Eighth Circuit read Loper Bright to, on the one hand, require courts to rigorously police the boundaries of an agency’s statutory authority and independently decide what the law is. But the Court also cited Loper Bright for the proposition that Congress often writes laws “intentionally [to] provide agencies with discretion.” And as Loper Bright teaches, “[w]hen the best reading of a statute is that it delegates discretionary authority to an agency,” the APA requires courts “to independently interpret the statute and effectuate the will of Congress subject to constitutional limits.”  

Applying these principles, the Eighth Circuit found that Section 202(h) is one such law, concluding that given the FCC’s “broad power to regulate in the public interest,” the agency “is best positioned to define ‘competition’ for purposes of Section 202(h).” The Court also invoked Loper Bright’s teaching that an agency’s contemporaneous and consistent interpretation can be evidence of a statute’s meaning as further supporting the FCC’s exercise of discretion to define “competition” for purposes of Section 202(h). As the Eighth Circuit put it, “[t]he Section 202(h) dispute here deals not with the meaning of competition, but with the degree—how much competition must be considered in analyzing the ownership rules subject to Section 202(h) review. . . . In essence, the question is one of line drawing.” Thus, while the FCC had to consider competition in its quadrennial review, it had discretion to decide how broad or narrow the relevant markets are. The Court framed that as a technical, policy-laden decision that Congress may delegate.  

The Court next addressed petitioners’ alternative argument that the FCC’s market definition was arbitrary and capricious. Quoting the Supreme Court’s recent decision in Seven County Infrastructure Coalition v. Eagle County, Colorado (a case which may further elucidate Loper Bright’s meaning), the Court also noted “[w]hile judicial review of an agency’s statutory interpretation is generally de novo, ‘when an agency exercises discretion . . . , judicial review is typically conducted under the Administrative Procedure Act’s deferential arbitrary-and-capricious standard.’” Applying this deferential standard, the Court “decline[d] to second-guess the FCC’s market definitions,” later noting that it was not judicial role to determine what decision the agency should have reached. 

The Court decided another statutory authority question in petitioners’ favor, quoting Loper Bright to reiterate that “[i]n evaluating the Section 202(h) challenge, we ‘must exercise [our] independent judgment in deciding whether [the FCC] has acted within its statutory authority.’” Petitioners argued that a provision of the 2023 Order that expanded a regulation exceeded the FCC’s authority under Section 202(h). The Court agreed. Again independently interpreting Section 202(h) to fix the bounds of the FCC’s authority, the Court concluded that it “provides for a two-step process. First, the Commission determines whether any of the regulations subject to review are necessary in the public interest as the result of competition. If the rules are no longer necessary, the Commission has two choices: repeal or modify.” Those choices are binary. By contrast, “[i]f the rules remain necessary in the public interest, . . . the inquiry and the FCC’s authority end.” In that case, the rule must remain in its current form unchanged. In other words, while Section 202(h) grants the FCC broad discretion in some areas, it is a one-way deregulatory ratchet that cannot be used to tighten regulations already on the books. The Court also rejected the FCC’s interpretation of “modify” to include the power to tighten regulations, using traditional tools of statutory construction. Based on that statutory interpretation, the Court found that the FCC’s decision to tighten a regulation it deemed “necessary in the public interest” was ultra vires. 

The Eighth Circuit’s thoughtful decision in Zimmer Radio is yet another example of Loper Bright’s continuing and emerging impact on administrative law and statutory interpretation.