Understanding Loper: Delegation and Discretion

Something similar to Chevron’s principle of deference may still apply to many (most?) regulations.

One thing about Loper Light the decision is obvious: it was rejected Chevron. So much for the old law. What about the future? How should courts review agency regulations now that Chevron lost?

In this post we will cover the key paragraph in Drifter opinion in which the Court discusses Congress’ delegation of power to agencies. The Court discusses three types of laws and this will be key for the justices in future cases to identify which type is present.

The first type involves a statutory grant of definitional authority. Many of these should be relatively easy to identify. The examples provided by the Court do involve the use of the word “define,” although presumably closely related terms such as delimit, describe, or interpret would also work. One more difficult issue may involve a grant of general rulemaking authority. For example, the Clean Air Act authorizes the EPA Administrator to “prescribe such regulations as are necessary to carry out his functions under this chapter.” Defining statutory terms seems reasonably necessary to carry out EPA’s duties. It is not clear, however, whether this would be considered sufficiently clear to qualify for Category 1.

The second category includes powers that grant agencies the authority to issue regulations “to supplement the details” of the statutory scheme. For example, many provisions of the Clean Air Act grant EPA express rulemaking authority. In addition, as noted above, the Act also contains a general grant of rulemaking authority.

In defining Category 2, the Court refers to “carrying out the details” of the law. It cites this formulation from a case involving Congress’ delegation of authority to courts to make procedural rules a general grant of rulemaking authority to carry out EPA functions. The principal questions doctrine appears to be built into this category: a principal question appears to be the opposite of “carrying out the details.” Only nonprincipal questions are treated as Category 2.

Category 3 contains laws that use broad terms that leave agencies flexibility. The court cites a previous case in which the EPA could take certain actions if it deemed them “proper and necessary.” The footnote then provides an example of a statute that authorizes the EPA to issue certain regulations it deems necessary to protect public health and public water supplies.

Once a court finds that a regulation falls into one of these three categories, the court’s task is to ensure that the discretion was exercised within the limits granted by Congress and that the agency provided a reasonable explanation for how it exercised the discretion. The court should make an independent determination as to whether these requirements were met.

The main difference between this test and the Chevron test is that Drifter calls for a more focused analysis of what authority has been delegated to the agency. Moreover, instead of saying that the court is deferring to the agency’s interpretation of the statute, the court will say that it is making an independent assessment of whether the agency’s rule was within the scope of the discretion permitted by the statute.

This approach may end up looking more than a little like Chevron in practice, but that will depend on how generously the courts define the categories and how much statutory discretion they find for agencies to clarify the statutes and fill gaps. Repeal Chevron may make the courts more interventionist, but Drifter gives agencies the opportunity to make their case.

Coming Wednesday: Loper and Skidmore Deference