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The week in SCOTUS: Who gets to decide what a statute means?

- July 3, 2015

Interns run behind a line of security outside of the Supreme Court in Washington, Friday June 26, 2015. (Jacquelyn Martin/Associated Press)
In her book “Up in Smoke,” the late lamented Martha Derthick wrote that “much of the activity of American policymaking consists of attempts not to pass new laws but to invest old ones with new meanings.” She was writing about the Food and Drug Administration’s efforts to regulate cigarettes under President Bill Clinton — but as I noted in an earlier post, she would find plenty of fodder in the Obama administration’s declarations of unilateralism aiming to leverage “pen and phone” into policy change.
Who gets to decide what a statute means? “Congress” is of course the first answer – legislators write the laws, after all. But for many reasons both good (e.g., the need to provide wiggle room to deal with unexpected real-world circumstances) and bad (e.g., incompetence in drafting bills) statutory language is frequently inexact, whether by choice or by chance. Thus the rise of administrative discretion, which has taken on more importance over time as the executive branch has grown in size and policy scope.
That discretion received some interesting buffeting in the Supreme Court this week. Normally, the Court preaches judicial deference to an executive branch department or agency’s interpretation of a vague law, assuming it does so in on reasonable grounds. This template was laid out in the 1984 Chevron case, as explained here in more detail.
In King v. Burwell, though, Justice Roberts’s majority opinion diverges from the lower courts’ reasoning and explicitly decides not to use the Chevron framework. The tax credits in question (and whether they could be provided to those insured via state, not federal, health care exchanges) were “central to this statutory scheme; had Congress wished to assign that question to an agency, it surely would have done so ex­pressly.” Thus in the Affordable Care Act, the court held, the statutory ambiguity in question was not delegated to the IRS in the first place. It was up to the court, not the agency, to figure out “the correct reading” of the section; it did so in the government’s favor, but while inserting the court firmly in between Congress and the executive branch.
Though he joined the “applesauce”-scented dissent to King, that interposition is apparently fine with Justice Clarence Thomas.
Thomas, in a concurring opinion to Michigan v. EPA, said he had “serious questions about the constitutionality about our broader practice of deferring to agency interpretations of federal statutes.” Normally this allows the agency to serve as “the authoritative interpreter” of ambiguous legal language. Going further still, a statute that is vague enough may allow the agency to “fill a space in the enacted law” that effectively turns interpretation into legislating. Both possibilities, Thomas argues, raise “serious separation-of-powers questions.” From here, a plausible turn would have been to rail against congressional laziness in drafting statute or its delegation of power to the executive branch – perhaps even to revive the 1935 Schechter Poultry doctrine, which struck down the New Deal’s National Industrial Recovery Act on the grounds that it gave legislative power to the president.
Instead, Thomas argues for enhanced judicial scrutiny. “We should be alarmed,” Thomas posits, that the “extremely permissive limits on agency power set by our precedents” have emboldened those agencies to think that they get to “say what the law is.” That, as discerning fans of jurisprudence will know, is the courts’ (also self-proclaimed) job.
The other arguments in the Michigan case, though, return to Chevron. The word “reasonable” is one of the few points of overlap in the competing opinions penned by Justices Antonin Scalia and Elena Kagan for the majority and minority, respectively. “Chevron directs courts to accept an agency’s reasonable resolution of an ambiguity in a statute that the agency administers,” Scalia says; Kagan says Chevron says “judges may interfere only if the agency’s way of ordering its regulatory process is unreasonable – i.e., something Congress would never have allowed.”
However, the two sides disagree entirely on what constitutes a “reasonable” interpretation of the law in question, the Clean Air Act. The majority (with Scalia rather happier than he has been in recent days) notes that the Environmental Protection Agency is allowed under the law to regulate certain power plants if that regulation is “appropriate and necessary.” However, when the EPA decided to regulate, it did not take the potential costs of such regulation into consideration.
Indeed, it decided not to do so. But while “there are undoubtedly settings in which the phrase ‘appropriate and necessary’ does not encompass cost.… this is not one of them.” Other parts of the law EPA relies upon do talk about cost, and the agency cannot engage in what Scalia calls “interpretive gerrymanders” that “keep parts of statutory context it likes while throwing away parts it does not.” In any case, “read naturally in the present context, the phrase… requires at least some attention to cost. One would not say that it is even rational, never mind ‘appropriate,’ to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits.”
Fans of cost-benefit analysis on both sides of the aisle might be pleased to see the Court reify such analysis into the very definition of “reasonable.” But the dissenters doubt both his dictionary and his math. It was perfectly “appropriate” to begin the regulatory process, they argue, knowing that future development of the rule would involve the cost-benefit analysis the Court demands.
In fact, under the regulatory review process run by the Office of Information and Regulatory Affairs (OIRA) on behalf of the president, an agency must “propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs.” Complaining of judicial “micromanagement,” the dissenters say that the EPA “took costs into account again and again and again and… so on.” In the end – some dozen years after it began – the agency calculated benefits of as much as $80 billion annually, against $9.6 billion in costs. Thus “the central flaw of the majority opinion,” argue Kagan et al, “is that it ignores everything but one thing EPA did.”
Philip Wallach, on Brookings Institute’s FixGov blog, notes that “it is hard to overstate just how central debates over Chevron’s proper application have been to recent legal developments governing America’s regulatory state.” How much deference will, and should, agencies be given? How much judicial oversight does it take to get to “micromanagement”? Is that micromanagement a bad thing, anyway? Given the likely expansion of presidents’ administrative agendas, we can expect these questions to return to the Supreme Court’s agenda as well.