How Powerful Do We Want Federal Agencies To Be?

THE MISSOURI BAR’S CITIZENSHIP EDUCATION PROGRAM

Part One:�Chevron

Although many think of the bureaucracy as a creation of Franklin Roosevelt’s New Deal, its roots go far back in our history.

• The Postal Service Act was signed by President Washington in 1792.
• The Bureau of Military Information was created in 1863.
• The Freedmen’s Bureau was established in 1865.

Admittedly, the Administrative State expanded greatly in the Twentieth Century with the creation of administrative agencies, departments, commissions and bureaus.

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Some saw this as the emergence of a dangerous fourth branch of government, doing the work that was supposed to be done by the people’s elected representatives.

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Others saw it as a way for a part of the government to develop the expertise necessary to address complex problems beyond the ability of most politicians.

https://www.foreignaffairs.com/

An undeniable reality was that as the Twentieth Century became the Twenty-First, the Administrative State was growing larger and more powerful.

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The courts struggled to adjust to the Administrative State.

• Obviously, the courts were to reject actions of the agencies that violated the law or were inconsistent with the Constitution.
• But what about the situation that arose frequently, in which the agency interpreted the law and did its job differently than the way judges would have done the job as administrators?
• Could the courts reject the actions of an agency when they disagreed, not with the legality of the agency’s actions, but with its policy choice?

The Supreme Court provided an answer in the landmark case of Chevron v. Natural Resources Defense Council (1984)

In this case, the Reagan Administration’s Environmental Protection Agency provided an interpretation of “stationary sources” within the Clean Air Act that some groups believed did not go far enough in protecting the environment.

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The Supreme Court ruled in favor of the EPA. Congress did not define what “stationary sources” would be, so it was the EPA’s prerogative to interpret the meaning.

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The Supreme Court in Chevron ruled that the judiciary should provide deference to the interpretation provided by the agency.

“The Administrator's interpretation represents a reasonable accommodation of manifestly competing interests, and is entitled to deference: the regulatory scheme is technical and complex, the agency considered the matter in a detailed and reasoned fashion, and the decision involves reconciling conflicting policies.”

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Why did the Court believe it proper to defer to the EPA and its interpretation of a broad law? In a word, “Expertise.”

• Justice Stevens considered the likelihood “that those with great expertise and charged with responsibility for administering the provision would be in a better position” to provide an authoritative answer than courts.
• Stevens would later state the idea bluntly: “Judges are not experts in the field.”

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In addition, the Court in Chevron argued that the agencies, with their ties to the political branches of government, were in a better position than courts to resolve these issues:

“An agency to which Congress has delegated policymaking responsibilities may, within the limits of that delegation, properly rely upon the incumbent administration's views of wise policy to inform its judgments. While agencies are not directly accountable to the people, the Chief Executive is, and it is entirely appropriate for this political branch of the Government to make such policy choices.”

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The Court’s decision in Chevron was that if the Reagan Administration wanted its EPA to interpret an ambiguity in the law in a certain manner, the judiciary would not stand in the way (Pictured here is EPA Administrator Anne Gorsuch, mother of Neil Gorsuch, meeting with President Ronald Reagan).�

https://www.newyorker.com/

This became known as the “Chevron Doctrine.”

• Step One.  Ask whether Congress was clear in defining the terms it used in the law. If so, congressional intent controls what agency does.
• Step Two.  If the statute is ambiguous, the agency’s interpretation will be upheld by the court provided it is reasonable, even if the court would have chosen an alternative interpretation.

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Critics of the Chevron Doctrine argue that it violates our system of separation of powers:�

• Chevron strips Congress of its power to legislate and promotes impermissible lawmaking by the executive branch.
• Chevron encourages legislators to pass ambiguous laws and empower unelected executive agencies to make important policy decisions.
• Chevron prevents the courts from engaging in their core responsibility of statutory interpretation.

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Supporters of the Chevron Doctrine believe it to be entirely consistent with separation of powers:�

• Chevron first asks whether Congress has directly addressed the question at issue. If so, both the courts and agencies must adhere to congressional intent.
• The second part of Chevron, asking whether an agency’s interpretation is reasonable, limits the agency and puts the courts in the position of engaging in statutory interpretation
• Some highly technical issues should be addressed by administrators

Which set of arguments do you find more compelling?

Do you believe the Chevron Doctrine should continue to be used in evaluating the legitimacy of agency actions?

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The power of administrative agencies and the continued acceptability of Chevron are at the heart of two cases currently being considered by the Supreme Court. Let’s look at these cases.�

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Part Two:�The Price of Drugs

American Hospital Association v. Becerra involves the ability of the Secretary of the Department of Health and Human Services to provide reimbursement payments to hospitals for prescription drugs used in the Medicare program.

https://www.glaad.org/

How was the amount of this reimbursement payment to be determined? The Secretary of HHS had an option, under the law.

• The Secretary could reimburse the actual cost of the drugs, if HHS did a formal cost study and determined how much hospitals were actually paying.

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• Or, if HHS didn’t want to do a formal study, the Secretary could reimburse for the average cost of the drugs. If this method was chosen, the Secretary could make reasonable adjustments to that amount.

In 2018, the Secretary of HHS, Alex Azar, came up with his own variation on the law, picking and choosing and mixing and matching the legal requirements he would follow.

www.informationcradle.com

Under a program called 340B, some hospitals were eligible to get some prescription drugs at a lower rate.

The Secretary made the decision to reimburse those hospitals at a lower rate because of this.

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The American Hospital Association challenged this, arguing that the Secretary was reimbursing based upon actual cost.

• Under the law, if the Secretary chose to do this, then he had to perform a cost study.
• The Secretary didn’t do this, so his action violated the law.

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The Secretary responded: When we reimburse for the average sales price, I am able to make a reasonable adjustment. That’s all I am doing here. I’m making a reasonable adjustment, only based on actual price.

If I am able to make reasonable adjustments in one category, why can’t I make them in the other category?

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The AHA responded: Because it violates the language of the law!

https://www.haikudeck.com/

The American Hospital Association filed suit, alleging that the Secretary of HHS did not follow the law in making his reimbursement decision.

The law stated that if the Secretary of HHS is going to look to the actual price of drugs, then the Secretary must do a formal study. This formal study was not conducted.

The District Court ruled in favor of AHA.

• This is not a Chevron situation, in which the courts should defer to the judgment of the administrator.
• Chevron requires an ambiguity in the law. There is no ambiguity in the law here.
• When the Secretary is focusing on actual cost, a thorough cost study must be done. That did not happen here, so the Secretary did not follow the law.�

The Court of Appeals ruled in favor of the Secretary.

The Secretary is engaging in an interpretation of his authority under the law and under Chevron, we should defer to the choice he made.�

The Supreme Court has a number of options:

• It can uphold the action of the Secretary, based upon the deference required by Chevron
• It can reject the action of the Secretary and reject the Chevron Doctrine
• It can reject the action of the Secretary, but leave Chevron intact, concluding that this was not a Chevron situation, since Congress was clear on what it wanted the Secretary to do

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If you were on the Court, which option would you choose?

Is your choice impacted by how you view the Chevron doctrine?

Part Three:�Making Major Decisions

�The second case being considered by the Court is West Virginia v. Environmental Protection Agency, which questions the extent to which administrative agencies should be involved in the resolution of significant public policy issues.�

Some background is essential

• In 1963, Congress passed the Clean Air Act, noting that "growth in the amount and complexity of air pollution brought about by urbanization, industrial development, and the increasing use of motor vehicles has resulted in mounting dangers to the public health and welfare.”

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• In 1970, Congress amended the Clean Air Act to include Section 7411, which directed the Environmental Protection Agency to regulate any new or existing stationary sources of air pollutants that cause or contribute significantly to air pollution.

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• The EPA was to issue guidelines on “the best system of emission reduction,” in which it considered cost, environmental and health impact and energy requirements.

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Some background is essential

• In 1987, Congress enacted the Global Climate Protection Act, which directed the EPA to formulate a coordinated national policy on global climate change.
• Among the greatest sources of air pollution are power plants, which not only create electricity, but also carbon dioxide and other greenhouse gas emissions. For many years, we debated whether these greenhouse gas emissions constituted air pollution within the meaning of the Clean Air Act.

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Some background is essential

• In 2007, the Supreme Court in Massachusetts v. EPA, resolved the question and ruled that carbon dioxide and other greenhouse gas emissions were air pollutants, covered by the act.
• Four years later, in American Electric Power v. Connecticut, the Supreme Court identified the EPA as “best suited to serve as primary regulator of greenhouse gas emission.”

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Building on these rulings, the Obama Administration’s EPA in 2015 issued the Clean Power Plan (CPP).

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The CPP relied on multiple strategies to reduce emissions from power plants:

• Existing power plants were to improve their efficiency, so that less coal would be burned to produce electricity.
• In the upcoming decades, power plants would be required to go from burning fossil fuels to using lower-emitting natural gas and renewable-energy sources.
• The EPA would work with states to achieve these goals.

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��In 2016, the Supreme Court, in a 5-4 decision, ordered a halt on moving ahead with CPP, giving the judiciary an opportunity to evaluate whether CPP is legitimate under the Clean Air Act.�

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The incoming Trump Administration’s EPA believed that the previous administration’s CPP had been a mistake. The Trump EPA repealed the CPP and came up with its own program: The Affordable Clean Energy (ACE) Rule.�

https://www.cnbc.com/

ACE was based on an interpretation of Section 7411 of the Clean Air Act that saw the EPA’s authority as limited to measures that could be implemented on the physical premises of a power plant, sometimes known as “inside the fenceline.” � �

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The Trump Administration believed that EPA could require actions like installing equipment that reduces a plant’s pollution, but not to make industry-wide recommendations about how plants should operate.

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The Trump Administration’s ACE was much more lenient with companies operating power plants. ACE:

• gave states discretion in setting standards for emissions
• gave power plants flexibility in terms of meeting those standards
• completely ignored all power plants other than coal-fired
• would result in less than a 1% reduction in emissions by 2035, according to the Trump EPA

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The actions of the Trump Administration’s EPA, repealing CPP and creating ACE, were challenged in the courts. In American Lung Association v. EPA (2021), the US Court of Appeals for the District of Columbia Circuit ruled against the Trump EPA.

The court rejected the repeal of the Clean Power Plan, it rejected the ACE Rule and sent the matter back to the EPA, now in the hands of the Biden Administration.

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The court’s conclusion was boldly stated: “In sum, traditional tools of statutory interpretation reveal nothing in the text, structure, history, or purpose of Section 7411 that compels the reading the EPA adopted in the ACE Rule.”

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Two coal-mining companies and 20 states, led by West Virginia, appealed the court’s decision to the United States Supreme Court. The Supreme Court agreed to consider the case.�

The primary issue in West Virginia v. EPA is whether the Environmental Protection Agency has the power to issue significant rules that will reshape the nation’s electricity grid and change an entire sector of the economy.

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At the heart of this case is the “Major Questions Doctrine:” Issues of vast economic and political impact are primarily the responsibility of Congress, not administrative agencies.�Responsibility for resolving these issues should be delegated by Congress to administrative agencies only with clear and unambiguous language.

The Major Questions Doctrine gained traction among some law school professors, attorneys and judges in recent decades.

Among those who have expressed support for the Major Questions Doctrine are Chief Justice Roberts and Justices Thomas, Gorsuch, Kavanaugh and Barrett.

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Recently, the Supreme Court has used the approach of the Major Questions Doctrine to reject significant agency action.

In Alabama Association of Realtors v. HHS (2021), the Court used the major questions doctrine as a basis to block enforcement of the Centers for Disease Control nationwide eviction moratorium. “If a federally imposed eviction moratorium is to continue, Congress must specifically authorize it.”

Recently, the Supreme Court has used the approach of the Major Questions Doctrine to reject significant agency action.

In National Federation of Independent Business v. OSHA (2022) the Court blocked enforcement of the Occupational Safety and Health Administration’s emergency temporary standard imposing COVID-19 vaccination and testing requirements on a large portion of the national workforce pursuant to its authority under the Occupational Safety and Health Act. “Permitting OSHA to regulate the hazards of daily life — simply because most Americans have jobs and face those same risks while on the clock — would significantly expand OSHA’s regulatory authority without clear congressional authorization.”

Bear in mind, though, that not everyone agrees with the Major Questions Doctrine

• It is not always clear at what point a question becomes “major” enough to have the doctrine apply.
• The doctrine has not always applied consistently to all agency actions.
• For a doctrine that emphasizes the need for major questions to be resolved by Congress, many times it ends up expanding the power of the judiciary.

�Does the Obama Administration’s enactment of the Clean Power Plan violate the Major Questions Doctrine? �Let’s break it down.

Let’s apply Major Questions: Does this case involve vast economic and political impact?

West Virginia’s Argument: The EPA is making choices about the fate of an entire industry and whether we should move to a new paradigm for the production of energy. These are questions for the people’s elected representatives to study for years.

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Let’s apply Major Questions: Does this case involve vast economic and political impact?

EPA Argument: The energy industry has achieved the CPP’s emissions goals already, nearly a decade early. There were no disastrous economic results. The energy component of the economy did not collapse. Workers kept their jobs. The “vast impact” of this issue was greatly overstated.

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�Who has the better argument on whether this case involves vast economic and political impact? West Virginia or EPA?

Let’s apply Major Questions: Has Congress provided clear and unambiguous language authorizing the EPA to take this action?

West Virginia’s Argument: Section 7411 of the Clean Air Act speaks in terms ensuring the “best system of emission reduction.” That involves making improvements in existing technology, not mandating a brand new system of creating energy.

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Let’s apply Major Questions: Has Congress provided clear and unambiguous language authorizing the EPA to take this action?

EPA’s Argument: Section 7411 empowers the EPA to identify and pursue the best system of emission reduction. The best system of emission reduction may very well involve a transition from fossil-fuel to renewable energy sources.

�Who has the better argument on whether this case involves Congress providing clear and unambiguous authorization to take this action? West Virginia or EPA?

Let’s apply Major Questions: Was the EPA intruding upon areas not within its core competencies?

West Virginia’s Argument: The Major Questions Doctrine says there must be a link “between the subject of the regulation and what the agency does.” The EPA’s purpose is not to force an entire industry to reinvent itself and it has exceeded its core competency.

Let’s apply Major Questions: Was the EPA intruding upon areas not within its core competencies?

The EPA’s Argument: The Major Questions Doctrine says there must be a link “between the subject of the regulation and what the agency does.” Regulation of greenhouse gases is squarely within the EPA’s wheelhouse, and this action, although substantial, was squarely within its core competency.

�Who has the better argument on whether this case involves the EPA staying within its core competencies? West Virginia or EPA?

Having considered these aspects of the Major Questions Doctrine, how would you rule on the validity of the EPA’s Clean Power Plan?��With West Virginia’s argument that the EPA exceeded its authority?�Or, with the EPA’s argument that the CPP was constitutional?�

There is a final dimension to this case. Some suggest that the Court should seize the opportunity to bring back the nondelegation doctrine.

• The nondelegation doctrine was the principle used by the Supreme Court in Schechter Poultry v. United States (1935) to invalidate an act of Congress that empowered a board to make regulatory decisions about the poultry industry.
• The Court explained that “Congress is not permitted to abdicate or transfer to others the essential legislative functions with which it is thus vested.”

After using the nondelegation doctrine a handful of times, the Supreme Court never used it again after the mid-1930’s.

• Instead, the Court adopted the approach that Congress may delegate to an agency the ability to regulate, if it provides to the agency “an intelligible principle” upon which an agency can base its regulations.
• In West Virginia v. EPA, the argument was made that Congress provided this intelligible principle with Section 7411 of the Clean Air Act, which directed the EPA to consider cost, environmental impact and energy needs.

What do you think?

Is this the case in which the Supreme Court should reestablish the nondelegation doctrine and tell Congress that if changes are to occur in the energy industry, it should make those changes itself?

What do you think?

Or has Congress engaged in a proper delegation of power, providing “an intelligible principle” to the EPA, and people simply don’t like what the EPA did?

Compare the way you evaluated the legitimacy of the agency actions in these two cases.

• The Chevron doctrine, the major questions doctrine and the nondelegation doctrine take very different approaches to how we should view agency actions. Which do you see as the best approach to use moving forward?
• Do you see administrative agencies as an important part of addressing this nation’s problems in the Twenty-First Century?