Felicia Ellsworth: Welcome to “In the Public Interest” from WilmerHale, an international law firm at the intersection of government, technology and business. Thank you for joining us. I’m Felicia Ellsworth.
Michael Dawson: And I’m Michael Dawson. Today’s episode is the latest installment in our second annual Supreme Court miniseries, where we dive into the most hotly contested decisions coming out of the Supreme Court this term and discuss the implications of the Court’s rulings going forward. In this episode of our Supreme Court miniseries, we will be discussing the Court’s recent decision in Loper Bright v. Raimondo, where the Court overruled a decades-old doctrine requiring courts to defer to agency interpretations of statutes under certain circumstances, a doctrine known as the Chevron doctrine. Joining me today is Kelly Dunbar, a partner in WilmerHale’s Washington DC office, who specializes in government and regulatory litigation. Thanks Kelly, for joining us to discuss this case.
Kelly Dunbar: Thank you, Michael. Very nice to be here.
Michael Dawson: Kelly, before we get started, could you say a word about what your practice consists of?
Kelly Dunbar: Yeah, absolutely. Our Government and Regulatory Litigation Group, as the name suggests, really deals with a wide range of government-facing or government-adjacent litigation and enforcement matters, whether state or federal. My particular practice encompasses that broad range, but I’ve also focused over the years on Administrative Procedure Act or APA.
Michael Dawson: Excellent. Let’s begin with the doctrine itself that the Supreme Court overruled. What was Chevron and why was it important?
Kelly Dunbar: The Chevron doctrine draws its name from a 1984 Supreme Court case, Chevron v. National Resources Defense Council, in which the Supreme Court set out a two-step framework for how courts should review agency interpretations of statutes that those agencies had been charged with administering by Congress. The Chevron decision said first that courts should decide whether the statute unambiguously resolves the question presented using the ordinary tools of statutory interpretation. If, after applying those ordinary tools of statutory interpretation, the court concludes that there is an ambiguity in a statute, however, at the second step of Chevron, courts were supposed to defer to a reasonable agency interpretation of this ambiguity in the statute. What this means in practice is that courts often found that Congress had not spoken clearly to a particular issue, and as a result took that congressional silence as a delegation of authority to an agency to actually interpret what the statute means in light of the statute’s goals, and in light of the agency’s expertise in administering the statute.
Michael Dawson: Now it’s out. It’s overturned. So after 40 years, why did the Supreme Court find that it was necessary to overturn Chevron?
Kelly Dunbar: This was a statutory decision. The majority of the Court essentially held that the text of the Administrative Procedure Act was inconsistent with the Chevron doctrine, which the Supreme Court developed, really, in 1984. And I think that’s a significant point about the decision. Justice Thomas concurred. For example, he held, or would have held, I should say, that Chevron was simply inconsistent with the Constitution and the design—
Michael Dawson: Article III.
Kelly Dunbar: With Article III, exactly. I think that’s significant because Justice Thomas’s view would foreclose Congress from expressly delegating agency interpretive authority, whereas the majority opinion I think leaves that open. The Chevron decision itself really stands for a default rule that no matter the statute, when an agency is charged with administering a statute and there’s an ambiguity or silence in the statute, we, the Court, are going to assume that Congress would have intended the agency—as opposed to a court—to fill that interpretive gap. That doctrine is now overruled. There is no longer a blanket across statute, default presumption that silence or ambiguity in a statute means that agencies get to step in and fill in the gap. But the majority opinion was clear that there are circumstances in which, in a particular statute, Congress can make delegations of interpretive authority to agencies. And when Congress does so, consistent with other constitutional constraints, such as the non-delegation doctrine, etc., that courts are bound to defer to agencies in those circumstances. By resolving the case as a statutory matter, the Supreme Court leaves open the possibility that in particular statutes there may well be expressed, or potentially even implied, indications that Congress meant to delegate interpretive authority to the agency in a particular circumstance.
Michael Dawson: Interesting. What does this mean for the future? Where do we go from here? Under what circumstances will courts defer to agency interpretations?
Kelly Dunbar: The short answer is time will tell. There are three areas I’ll flag quickly. The first is the issue we were just talking about. Chevron is overruled. There’s no longer a blanket presumption that silence or ambiguity is a delegation, but in a particular statutory context, will the federal government take the position that in this particular statute, Congress has actually delegated some authority to an agency? I think we’ll see lots of fights over that question moving forward and under what circumstances courts should bind a delegation of authority in a particular statute. Second, there was some language in the majority on the question of whether deference is appropriate when an agency is applying a legal standard to a set of factual circumstances. It remains an open question whether, in particular cases, agencies will take the position that this is not a pure question of statutory interpretation, this is actually more of a mixed question of fact and law and argue that the Loper Bright decision did not clearly foreclose agency deference in that circumstance. The third battlefront, so to speak, that I see moving forward is the scope and meaning of so-called Skidmore deference. Skidmore was a 1944 Supreme Court decision that suggested in particular circumstances executive branch interpretations of statutes might well get some type of measure of respect. I think the consensus view had been that Skidmore deference really wasn’t a deference doctrine at all. It was basically that a court would look to see what the executive branch had said and if it found that persuasive, it might well agree with the executive branch but not that the executive agency should get any particular special solicitude in interpreting a statute. That said, the majority decision is really littered with references to Skidmore deference and the idea that in certain circumstances, particularly where an agency enacts a view of the statute roughly contemporaneously with the statute’s enactment and where an agency consistently applies that interpretation across time, a court might well, even consistent with the majority opinion, give those views some measure of respect, even if not deference. And so I think we will, at least over the next five years, continue to see litigation over exactly what Skidmore deference is and does it have any teeth?
Michael Dawson: Justice Kagan really chides the majority for flouting the concept of stare decisis. And then there are very interesting responses by the majority and by Justice Gorsuch in his concurrence. What do you make of Justice Kagan’s criticism on the stare decisis front?
Kelly Dunbar: The majority applied the traditional stare decisis factors, and I think the real inflection point on the debate there was related to reliance interest. Justice Kagan makes the point in dissent that Chevron has been a bedrock of administrative law for 40 years, there are thousands and thousands of judicial decisions that have relied upon it, Congress has relied upon this when it’s enacted statutes, there have been efforts to overturn Chevron legislatively that had resoundingly failed, and essentially that Chevron provided a stable background default rule that had governed in the administrative law area for decades and that there were significant reliance interest in the Supreme Court turning its back on the doctrine. The majority, its most powerful points were the idea that Chevron was actually fundamentally inconsistent with the stability of the rule of law, as well as reliance interest. And I think Justice Gorsuch, in his concurrence as you alluded to, Michael, pointed to one particular example, which is one that I’ve followed over the years which is basically for the last three or four presidential administrations, at least, the Federal Communications Commission has shifted its view as to whether Internet services are regulated under Title I or Title II of the Communications Act. This is the so-called net neutrality, or open Internet, debate, and that topic was actually the subject of one of the Supreme Court’s decisions on Chevron called Brand X, which got some airtime in the Loper Bright case. But Justice Gorsuch’s point was essentially that every time there was a change in political administration, the FCC, because the Supreme Court had held the Communications Act is not unambiguously resolved whether Internet access service is a Title I or a Title II service, that basically there was a game of ping pong going on every time the party in charge of the FCC essentially changed hands. As a result, there had simply been no stability on this critical question of law for a decade and industry and the public and stakeholders alike were harmed by that sort of flip-flopping back and forth between different statutory interpretations. So I think that point from Justice Gorsuch, as well as the majority’s view, that the reliance interests on Chevron are also diminished because essentially we, the Supreme Court, haven’t actually applied it in eight years, and we’ve also carved out all of these different exceptions to Chevron such that it’s very difficult to tell when Chevron actually applies. The federal government’s never been able to tell us, the majority says, what an actual ambiguity looks like that’s sufficient to trigger deference, there’s debates about that, this is essentially just an unworkable mess. Justice Kagan on that point, I think, has a fairly punchy reply in her dissent, where she criticizes the Court for following a playbook that she says they have followed in other contexts, which is to basically stop applying the precedent, also then start creating a bunch of exceptions to that precedent, and then a few years later claim that because we don’t rely on it anymore and because we’ve created all these exceptions, there’s no longer any reliance interest and therefore the precedent is game to be overturned. Where one comes down as to whether Chevron actually provided a reliable, stable background default rule, and whether there were legitimate reliance interests on the decision, I think was a key debate between the majority and the dissent in this case.
Michael Dawson: Just to develop this issue of reliance and the consequences of Loper Bright a little bit, let’s take the example of the net neutrality rule and Brand X. Can that issue now be relitigated or is it settled by Brand X?
Kelly Dunbar: So this is a really good question. In the briefing before the Court and at oral argument in Loper Bright, the Solicitor General, on behalf of the United States, did make arguments that the reliance interests here were very significant because there had been so many agency decisions that had been upheld—at so-called Chevron step 2—in the past, that all of those decisions and all of the underlying agency regulations would now be fair game for re-litigation. This is also, I think, a significant issue because the Supreme Court, subsequent to Loper Bright, decided a case the following Monday that actually gave aggrieved parties much more time to challenge old agency interpretations of regulations than had previously been thought. So the Solicitor General’s concern, and this is reflected in Justice Kagan’s dissent, is that all of these decisions now, over the past several decades, might be fair game for re-litigation for someone coming in and saying, although a court held that the statute was ambiguous and then deferred to an agency’s reasonable interpretation of the ambiguity at Chevron step 2, that actually the statute resolves the question, and that’s a job for the court, not the agency, and the agency’s interpretive view, whether it’s embedded in a regulation or some other agency decision, is actually unlawful. The majority in Chief Justice Roberts’ opinion contains a preemptive response to this point and he says no, no, no. It takes a special justification to overrule precedent, and it should not be a special justification just to say that the prior judicial decision relied on Chevron, and Chevron has now been overruled. More than that will be necessary. I think Justice Kagan and some other commentators have questioned exactly how much of a barrier that is because while Chevron’s overruling itself might not be a special justification for revisiting a decision, creative lawyers and stakeholders may well come up with additional reasons that a particular judicial precedent upholding an agency decision ought to be revisited in light of changed circumstances, etc. That is definitely another place where we will likely see lots of litigation over the next several years.
Michael Dawson: Let me ask you to put yourself in the shoes of a general counsel of a corporation that is regulated to some degree—almost every corporation is. How do you think about ways in which you should be protecting or advancing the interests of your business post-Loper Bright as you lobby Congress for particular legislation, as you work with agencies and rule makings, and as you litigate rule makings after the rules have been promulgated. What does it mean for the job of a GC post-Loper Bright?
Kelly Dunbar: So it’s a really good question, Michael. I think the number one lesson is as a general counsel, not to simply reflexively assume that everything that a federal agency does will be upheld as lawful by courts, in part because of Chevron, but also because of related doctrines that can make it sometimes challenging to successfully sue to challenge an agency regulation or guidance document. I think the Loper Bright decision really makes clear that as a general counsel, litigation against an agency may well have downsides and consequences. But the working assumption that you just can’t prevail when you’re up against a federal agency on questions of statutory interpretation, even on technical questions of statutory interpretation, I think that view should be jettisoned and instead the working assumption as a GC for a company should be that where an agency acts outside the bounds of its statutory authority, that courts will now be much more likely to rein those agencies in. The final point I would just make is that this is a shift in power, essentially, from federal agencies to courts, and there is some concern that now that courts are really in the primary driver’s seat, will businesses, regulated entities, the public really get more predictability? Will they get better predictability? Or will we now end up in circumstances where on critical questions of statutory construction where a statute doesn’t seem to answer the question clearly, are we going to end up with very splintered, disuniform views from various federal district courts about what the statute means?
Michael Dawson: Your comment about the shift in power from agencies to courts prompts me to ask about Congress and what we think the likely legislative response is going to be. Do you anticipate that Congress will start legislating with greater clarity? Greater specificity? Do you think they’ll start to incorporate expectations around the standard of deference that should apply to a particular statute? Will they amend the APA to reinstate Chevron? What do you think Congress will do?
Kelly Dunbar: I think there are lots of things Congress could do, and I’m not so much an expert on actually predicting what’s politically feasible or realistic. But I do think that challengers of the Chevron doctrine hope that this will lead Congress itself to begin making many of the more consequential policy decisions instead of just handing those off to an agency. I think there’s reasons to doubt whether realistically Congress will do that. So the idea that on something like crypto regulation, for example, Congress could write a very highly detailed statute that could take account of technological market developments that are likely to occur over the next three, to four to five years even a decade, I think there’s reasons to doubt that. But you’re also exactly right that Congress could really test the limits of the majority opinion’s point that we’re not ruling out Congress making express delegations of interpretive authorities to agencies by being more clear about that in particular statutes. I think that will put a lot of pressure then on the Justice Thomas view that at some point Congress just can’t constitutionally hand off interpretive questions to agencies and take those questions away from courts. So if you take an example of an agency provision that says this particular federal agency can approve this particular transaction if it’s in the public interest, and that’s the sole statutory standard, one might look at that and say, well, that basically is a delegation to the agency because Congress didn’t purport to define what the public interest entails, it didn’t define any standards. That is a necessary delegation to an agency to actually apply the law to the facts and decide what’s in the public interest. But you could imagine Justice Gorsuch or others on the Court saying maybe, but we find that to be an unconstitutional delegation under the non-delegation doctrine because it’s so broad and so standardless that it’s effectively giving legislative policymaking authority to agencies. I think it will sort of be an interesting area of law to watch over the next few years.
Michael Dawson: I think that’s a great place to end the conversation and appreciate outlining for us the areas of likely debate, contention and litigation. So thanks very much, Kelly, for that excellent discussion.
Kelly Dunbar: My pleasure. My pleasure. Thank you for having me.
Felicia Ellsworth: Thank you, everyone listening, for tuning in to this episode of “In the Public Interest.” We hope you’ll join us for our next episode. If you enjoy this podcast, please take a minute to share with a friend and subscribe, rate, and review us wherever you listen to your podcasts. If you have any questions regarding this episode, please email them to us at [email protected].
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Felicia Ellsworth: See you next time on “In the Public Interest.”
