Will recent Supreme Court rulings 'devastate the functioning of the federal government?'

The Supreme Court in recent days has issued a series of rulings that collectively have the potential to neuter a broad array of federal agencies, or tie them up in endless litigation that prevents them from carrying out their missions. 

The court has been chipping away at agencies’ administrative powers for years, but the issues came to a head in the last week as it delivered three decisions that have upended decades of precedent agencies have leaned out to flex their regulatory muscle. Now, scholars, dissenting justices and agencies themselves warn, agencies could be severely constrained as they attempt to implement laws and exercise their powers. 

Last week, the court overturned the precedent known as Chevron deference, which said broadly that courts must defer to agencies when interpreting ambiguous statutory language. In Relentless and Loper Bright v. Commerce Department, the court ruled in a 6-3 decision—the same tally in all three of the recent rulings—that the judiciary, not federal agencies, should resolve questions of law according to their own judgment. In Jarkesy v. Securities and Exchange Commission, it ruled that agencies issuing civil penalties should defend those decisions in federal court rather than solely in in-house tribunals.

The court dealt yet another blow to federal agencies on Monday, deciding in Corner Post v. Federal Reserve that it must strike down the existing six-year statute of limitations to sue the government over a rule. Instead, the court said, the clock starts whenever a party can claim to suffer an injury as a result of an agency-issued rule. In this case, a truck stop in North Dakota challenged a cap on debit-card processing fee issues by the Federal Reserve. 

Like the other cases, the fallout from Corner Post is likely to be widespread: agencies will see no time limit on the challenges they face from their rules and regulations. Any regulated party can sue at virtually any time, leaving agencies to constantly defend themselves in court even decades after issuing a rule. 

In her dissent, Associate Justice Ketanji Brown Jackson warned of the consequences, particularly when taken in conjunction with the court’s other recent decisions. 

“At the end of a momentous term, this much is clear: the tsunami of lawsuits against agencies that the court’s holdings in this case and Loper Bright have authorized has the potential to devastate the functioning of the federal government,” Jackson wrote. “That result simply cannot be what Congress intended when it enacted legislation that stood up and funded federal agencies and vested them with authority to set the ground rules for the individuals and entities that participate in…our economy and our society.” 

Bridget Dooling, a law professor at Ohio State University who served for 10 years in the White House's Office of Information and Regulatory Affairs, including as its deputy chief, said the cumulative impact of the decisions could open the floodgates of new litigation against federal agencies. 

“Now it is open season on the regulatory state,” Dooling said. 

Will agencies ‘proactively change?’ 

The pressure could prove significant enough that it alters the way agency staff approach their jobs. A Congressional Research Service report this year cited a survey in which 88% of agency rule drafters said that Chevron made them more willing to adopt “a more aggressive interpretation” of the law. 

Susan Dudley, OIRA administration under President George W. Bush and a scholar at the George Washington University’s Regulatory Studies Center, predicted agency employees are likely to “proactively change” how they think about regulations and what their authorities are under existing statute. Dudley said agencies could become less transparent rulemaking, as agencies ditch the formal, public regulatory process in favor of guidance documents or ad hoc adjudications. 

Barry Hartman, a former Justice Department official and a partner at K&L Gates, said during a panel discussion on Monday that agency leaders would be wise to alter their approaches going forward. 

“You need to be careful,” Hartman said he would tell a new, incoming secretary. “You can't simply change [a rule] because you want to. You have to be very careful about what you're doing.” 

To an existing secretary, he added, he would say, “You better get a bigger budget...there's going to be a tsunami of litigation.” 

He and other attorneys at the firm noted the Supreme Court made clear ambiguity in the law will no longer be treated as delegation to federal agencies. Varu Chilakamarri, another partner at K&L Gates and former deputy assistant attorney general at Justice, called Chevron the “most cited administrative law case in our history” and noted the regulated community will now feel much more empowered that their arguments will be given equal weight as an agency’s. 

Agencies themselves have also sounded the alarm over the complications that would arise if Chevron were rejected. Jonathan Meyer, general counsel for the Homeland Security Department, told the American Bar Association in May that 535 members of Congress cannot possibly get into the weeds of “every small issue.” 

“So then you have a real vacuum in terms of what agencies can do, and I think that is the problem,” Meyer said. “Then you have the courts having to weigh in every time and look at it without deference. It becomes more chaotic. There is less legal certainty for anyone who is affected by the regulation.”

That chaos could become exacerbated as different courts around the country issue conflicting interpretations of arcane policy matters, rather than uniformly deferring to one agency opinion. 

Stan Meiburg, a former acting deputy administrator and regional leader at the Environmental Protection Agency, said the courts will now be able to place their own policy preferences over agency decisions. 

“The decision effectively weakens both Congress and the executive branch,” Meiburg said. “The Chevron cure announced by the court will be worse than the disease.”

Rachel Weintraub, executive director of the Coalition for Sensible Safeguards, which represents groups advocating for public health and consumer protection, said that while the recent decisions “starkly impede agencies’ ability to protect the public,” she hoped the rulings would not change how they approach regulating various industries. 

They do not “affect underlying missions, and it’s incredibly important for agencies to fulfill their missions and promulgate safeguards,” Weintraub said. “Key experts at agencies should continue to do their work unimpeded.” 

Dudley predicted the White House would get more involved earlier in the rulemaking process to weigh in on statutory interpretation and ensure agencies are making the strongest possible argument. She also suggested the recent cases may not end up breaking down along liberal versus conservative or pro-regulation versus anti-regulation lines. Instead, she said, as new administrations find it difficult to convince judges of their intent to overhaul regulatory interpretations, the system could become more stable. 

“We might see a little bit less of the polarization and whipsawing of one administration to another,” Dudley said.