SCOTUS’s GVR in American Gas: Fact-Bound Deference After Loper Bright 

Earlier this week, the Supreme Court granted the petition for writ of certiorari in American Gas Association v. Department of Energy, vacated the D.C. Circuit’s judgment below, and remanded for reconsideration “in light of the position asserted by the Solicitor General” in the government’s response brief.  This move revives the fight over the validity of the Department of Energy’s (“DOE”)  efficiency standards for residential furnaces and commercial water heaters.  More importantly, the GVR puts front and center on remand a question that courts are already grappling with:  can Loper Bright be sidestepped by recasting legal interpretation as an exercise of fact-bound expertise? 

Background – The D.C. Circuit Opinion 

As I explained last fall, under the Energy Policy and Conservation Act (“EPCA”), DOE may set and adjust energy efficiency standards for certain consumer appliances, including furnaces and water heaters.  That authority is cabined in at least two ways. First, whenever  DOE proposes more stringent standards, it must consider whether those changes are economically justified. Second, the agency cannot increase standards if an interested party shows the changes would result in a “product type (or class) of performance characteristics” becoming unavailable to consumers. 

At the end of the Obama Administration, DOE initiated rulemakings to impose new conservation standards for consumer furnaces and commercial water heaters.  As part of that process, the agency determined there was no meaningful difference between condensing and non-condensing appliances.  DOE’s position then flip-flopped across the Trump and Biden administrations: first, in 2019, the agency finalized an interpretative rule taking the opposite view, and then again in 2021, when it reverted to its “historical” position.  Final rules followed in 2023, along with lawsuits from industry groups and manufacturers, who argued the phase-out of non-condensing appliances was unlawful. 

Applying Loper Bright, the D.C. Circuit concluded that Congress had given DOE a “degree of discretion” to decide what constitutes a “performance characteristic” or “feature” under EPCA. Those terms, the majority explained, were quite broad as a matter of plain meaning but needed to be understood as applied in a case-specific context that accounted for DOE’s “evaluation of scientific data within its area of expertise.” Thus, while the parties agreed at the level of broad definitions, the Circuit hesitated to second-guess DOE’s judgment about whether the ability of non-condensing appliances to function with existing venting qualified as part of a “performance characteristic.” Judge Rao, in dissent, cast the majority’s holding a manifestation of “Loper Bright avoidance.” On her view, the parties’ dispute presented a straightforward question of law that could be resolved without any semblance of deference to DOE’s “expertise,” let alone its application of EPCA to a particular set of factual circumstances.

Briefing at the Supreme Court 

At the Supreme Court, the petitioners presented two questions for the Court’s consideration, the first of which dealt with Loper Bright:

Whether courts may defer to an agency’s legal interpretation of a statute because an agency applied the statute to undisputed facts, despite this Court’s holding in Loper Bright . . . that courts must construe statutes without deference to agency statutory interpretations. 

In fleshing out their argument, the petitioners explained the Circuit had initially acknowledged the phrase in dispute—“performance characteristics”—had a “plain” and “broad” meaning that was ascertainable using traditional tools of statutory construction. Indeed, the majority even recognized that “DOE’s interpretation . . . does not bind us” and could only be “especially informative” so far as it had the “power to persuade”—an explicit nod to Skidmore. Yet it still deferred to DOE because it believed the case involved not just a pure legal question, but the application of EPCA to “undisputed facts purportedly involved [in a] ‘case specific’ judgment.” The petitioners highlighted how the Circuit had confused Loper Bright’s discussion of delegated discretion in this regard. Although Congress can give an agency express authority to regulate by defining terms or implementing inherently broad standards like “reasonable” or “appropriate,” “general administrative responsibility,” as obviously involved in the application of law to facts, “does not allow agencies to redefine statutory limits.”

The Solicitor General’s response to the petition was notable not just for its bottom-line concession, but for its framing of the issues at hand. As my colleague, Michael Pepson, discussed in April, the government declined to defend the split-panel decision and instead conceded that DOE’s understanding of “performance characteristic” was “unduly narrow.” The Solicitor General noted, for example, how the Administration was committed to initiating a “new rulemaking”— one that substantially revises or rescinds the rules at issue. The brief also laid out a second argument for the GVR: giving the D.C. Circuit an opportunity to “clarify its holding,” given its conflation of the parties’ positions and overall imprecision.

Next Steps in Loper Bright Implementation

The Supreme Court honored the Solicitor General’s request but provided no indication whether it agreed with any particular elements of the government’s arguments. Why, exactly, was the GVR appropriate? Abstracting away from the facts of this specific case to the broader implications on remand, there are at least three broad issues that could arise on remand:

First, it remains unclear what Loper Bright requires when judges review agency interpretations that rest on “factual premises within [the agency’s] expertise.”  This is the language the majority in American Gas Association latched on to.  But in Loper Bright, the Chief Justice’s mention of “factual premises” cited to Bureau of Alcohol, Tobacco and Firearms v. Federal Labor Relations Board—a case that presumed an underlying express delegation of policy-making authority.  The notion that, absent an express delegation, the  mere application of law to facts could somehow insulate an agency’s judgment from meaningful de novo review, including in cases involving mixed questions of law and fact, is simply wrong.  I considered a variation of this argument in my recent review of Professor Matthew Stephenson’s article on implicit delegation.  

Second, there is the question of how courts should evaluate the persuasiveness of “expert” interpretations, especially those that involve “predictive or scientific judgments.”  Justice Kavanaugh’s endorsement of Baltimore Gas deference in Seven County Infrastructure Coalition v. Eagle County, for example, is difficult to square with Loper Bright, particularly when it is applied in cases that do not involve express delegations, or where the court has otherwise opined on the meaning of the statutory provisions at issue, as in American Gas Association. 

Third, the mention of “general administrative responsibility” in the American Gas Association petition raises the issue of “housekeeping” statutes. Following Loper Bright, some courts have tended to treat these provisions, which are arguably meant only to authorize agency to promulgate interpretative or procedural rules, as broad delegations of legislative rulemaking authority. Michael Pepson and I have addressed this problem at length as it remains an occasion for judicial mischief and, indeed, the very “Loper Bright avoidance” that Judge Rao bemoaned in her American Gas Association dissent.

Although the American Gas Association court disclaimed Chevron-style deference, the majority’s reasoning risks reintroducing it through the back door. If a court can simply characterize a question of law as dependent on agency “expertise,” meaningful independent judgment is difficult to sustain as a default rule. The D.C. Circuit’s reconsideration will therefore matter well beyond the proper understanding of DOE’s authority under EPCA.

Ryan P. Mulvey is Senior Policy Counsel at Americans for Prosperity Foundation.