Ever since the Supreme Court’s 1984 decision in Chevron v. NRDC, federal administrative agencies tasked with implementing statutes have been given broad discretion to determine the scope of ambiguous statutory terms. As a result, agencies have sought to maximize their powers whenever Congress uses an even arguably ambiguous word or phrase in a statute. Yet the quaint notion that Congress may not delegate full legislative authority to an administrative agency because of separation of powers principles has not been seriously enforced by the Supreme Court for decades. But recent Supreme Court decisions arguably have eroded Chevron, thereby opening the door to a possible resuscitation of the anti-delegation doctrine.
Perhaps the most serious recent inroad into Chevron deference was made in June of this year when Chief Justice Roberts, writing for the majority of the Supreme Court, authored King v. Burwell, where he observed that even where statutory language is unambiguous, a court should not defer to agency discretion in connection with a “question of deep economic and political significance that is central to a statutory scheme.” In King, the IRS had issued an interpretive rule making tax credits available to individuals signing up for health insurance under the Affordable Care Act (known to many as Obamacare) regardless of whether the individual obtained the insurance through a state or federal exchange. The statute explicitly limited tax credits to individuals obtaining insurance through “state” exchanges. Because the issue was crucial to the statutory goal of encouraging people to obtain health insurance, the Court refused to defer to the IRS rule but decided that only it had the authority to interpret that particular statutory provision. Although the Court ultimately ruled that individuals covered under either federal or state exchanges could claim the tax credit, the carve-out from Chevron deference afforded to questions of “deep economic and political significance” is important, and may pave the way for future efforts to pull back Chevron, especially in emerging and highly controversial areas affecting millions of Americans, such as the EPA’s greenhouse gas regulations under the Clean Air Act.
King v. Burwell follows on the heels of other recent Supreme Court cases eroding Chevron deference. For example, in Michigan v. EPA, decided three months before King, Justice Scalia, writing for the majority, opined that EPA unreasonably refused to consider costs when the agency decided that it was “appropriate and necessary” to regulate certain emissions from power plants under a provision of the Clean Air Act. In response to EPA’s argument that the term “appropriate and necessary” was ambiguous and that, therefore, the Court should defer to the agency’s interpretation that costs need not be considered, Justice Scalia opined that EPA “strayed far beyond” the bounds of reasonable interpretation when it decided to ignore costs. And one year before Michigan and King were decided, the Supreme Court held in URAG v. EPA that an agency may not interpret an ambiguous statutory term in a manner inconsistent with the design and structure of the statute. Finally, in 2013 the Court held in City of Arlington, TX v. F.C.C. that, before providing Chevron deference to an administrative agency, courts must first determine whether Congress delegated authority to the agency to define the particular statutory term at issue.
Taken together, these recent cases may herald a new, post-Chevron paradigm. Federal courts will no longer be able to rubber-stamp agency interpretations of ambiguous statutory language without considering whether the agency has been delegated authority to interpret the particular statutory phrase at issue. Or whether the agency interpretation is inconsistent with statutory design and structure. Or whether the agency “strayed far beyond” the realm of reasonable interpretation. Finally, and perhaps most importantly, courts will no longer be able to ignore whether the issue has such “deep economic and political significance” that an administrative agency should not be permitted to define the statutory term. These four important limitations on Chevron intimate that, in an appropriate case, the Supreme Court may be willing once again to seriously address the separation of powers issues inherent in overbroad agency delegation of legislative authority. That could be a useful weapon in our fight against government by administrative fiat.