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House Approves Legislation to Overturn Court Ruling on Deference to Regulatory Agencies

Tuesday, July 19, 2016
Sandler, Travis & Rosenberg Trade Report

The House approved by a 240-171 vote July 12 a bill (H.R. 4768) that would overturn a 1984 Supreme Court ruling allowing courts to defer to regulatory agencies’ interpretations of ambiguous federal laws. A Senate version of the bill (S. 2724) has 12 co-sponsors and is currently pending before the Senate Judiciary Committee.

In Chevron U.S.A., Inc. v. Natural Resources Defense Council the Supreme Court held that if a law passed by Congress is silent or ambiguous with respect to a particular issue, the courts should defer to a reasonable interpretation (i.e., one that is not arbitrary, capricious or manifestly contrary to the statute) by the agency responsible for enforcement. This principle has been extensively utilized since that time, including in customs and trade litigation.

However, the committee report on H.R. 4768 states that Chevron “realigns the incentives” for each branch of federal government. Rather than having a strong incentive to write statutes carefully and clearly to best express its intent, the report states, Congress has an incentive to write less careful statutes that poorly express its intent, “secure in the knowledge that regulators and courts can and will paper over legislative insufficiencies and insulate legislators against accountability for inadequate work.” Federal agencies, rather than having an incentive to interpret statutes as faithfully and rigorously as possible (the best way to assure that courts might ultimately uphold their actions), have an incentive to “play fast and loose with their interpretations and play politics with their choices, so long as they stay within the ‘permissible’ range of alternatives for interpreting vague statutory terms.” Courts have an incentive to perform a less rigorous job of statutory construction themselves, the report states, as well as an incentive and a means to avoid “the more confrontational work of declaring Congress’ work in statutory provisions void for vagueness or simply and clearly lacking in a delegation of authority to an agency.”

The result, the report states, is the “modern administrative state” in which “gaps and ambiguities are too often left intentionally by Congress, to be filled by unaccountable agency officials, whose work in turn is facilitated by deference from unaccountable judges.” At the same time, the report adds, the courts have struggled since Chevron to “define precisely when deference is appropriate and when it is not. In response, bill sponsor Rep. John Ratcliffe, R-Texas, said the Separation of Powers Restoration Act would require federal courts to conduct a “de novo” (new) review of all relevant questions of law “rather than leaving such interpretation up to the whims of federal bureaucrats.”

The committee report includes a dissenting view from ten House members who called the bill “a very ill-conceived solution in search of a non-existent problem.” The dissent said H.R. 4768 would “empower a generalist court lacking the expertise, resources, and public input to nullify agency action solely on policy grounds” and impose a “heightened review standard” that would make the process of issuing federal regulations “even more costly and time-consuming.” The White House added that it “strongly opposes” this bill and that President Obama’s senior advisors would recommend he veto it because “it would unnecessarily overrule decades of Supreme Court precedent, it is not in the public interest, and it would add needless complexity and delay to judicial review of regulatory actions.”

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