Parcel shippers monitoring and seeking to predict federal legislative and regulatory policy trends usually must pay attention to all three branches of the federal government – the Congress, the courts, and the Executive Branch, with its regulatory agencies. This year, the most important federal regulatory development for parcel shippers, affecting all three branches of government, has been delivered by the Unites States Supreme Court.
In two cases, the Court has (a) upended the time limits for when federal agency regulations can be legally challenged and (b) eliminated a 40-year-old legal doctrine that required courts hearing such challenges to defer to agency interpretations of ambiguous laws. Combined, these two decisions may result in less predictability in the formation and interpretation of federal regulatory law and policy affecting parcel shippers.
Congress sometimes drafts statutes that are ambiguous or do not cover every issue within the intended scope of the law. When Congress authorizes a federal agency to implement and administer such laws, the question can arise as to whose interpretation of the law governs – that of the federal agency or a reviewing court?
In 1984 the Supreme Court answered this question by adopting what is known as the Chevron doctrine of judicial deference to federal agency actions. Stating that “judges are not experts in the field, and are not part of either political branch of the Government,” in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., the Supreme Court stated that if a law was “silent or ambiguous with respect to the specific issue” a court reviewing an agency action could not “simply impose its own construction on the statute.” Instead, under Chevron the court needed to defer to the agency’s interpretation of the law if the agency offered “a permissible construction of the statute.”
For 40 years, the Chevron doctrine guided Congress, government agencies, and regulated industries in providing a framework as to whether a federal agency’s actions were lawful when interpreting a law. If a permissible reading of the law, the agency’s interpretation generally controlled.
The Supreme Court has now overruled the Chevron doctrine. In Loper Bright Enterprises v. Raimondo, the Court stated that Chevron was wrongly decided and is contrary to the Administrative Procedure Act (APA), a 1946 law that governs administrative agency procedures and actions. Going forward, the Court in Loper Bright held that while a court reviewing an agency’s regulatory actions can give careful attention to the judgment of the agency, the courts may not defer to an agency’s interpretation of the governing law. The court must instead make its own independent judgment as to whether the agency has acted lawfully.
In a dissenting opinion, Justice Kagan predicted in Loper Bright that:
[T]he majority’s decision today will cause a massive shock to the legal system, “cast[ing] doubt on many settled constructions’ of statutes and threatening the interest of many parties who have relied on them for years.”
The Supreme Court’s second 6-3 decision, in Corner Post, Inc. v. Board of Governors of the Federal Reserve System, illustrates this possibility. In Corner Post, the Court held that the six-year statute of limitations for claims against a federal agency brought under the APA accrues when the party filing the claim against the agency is injured by the final agency action, not the date on which the agency may have adopted the regulation being challenged.
The Corner Post decision involved a truck stop operator who sought to challenge the validity of a 2011 regulatory action by the Federal Reserve Board governing debit-card transaction fees. Previously challenged and upheld by a federal appellate court in 2014, the lower courts held that the regulatory action had to be challenged in 2017, within six years of the date it was published.
The Supreme Court reversed, finding that even though the truck stop operator was not created until 2017 and started operations in 2018, after the six-year period had expired, it was entitled to challenge the rules because its claims arose from the date on which it was affected by the regulations, not the date on which they were promulgated.
As Justice Jackson stated in her dissent, the practical effect of the Corner Post ruling is that:
“there is effectively no longer any limitations period for lawsuits that challenge agency regulations on their face. Allowing every new commercial entity to bring fresh facial challenges to long-existing regulations is profoundly destabilizing for both Government and businesses.”
The majority justices in both the Loper Bright and Corner Post cases answered the dissenting justices’ criticisms that the decisions will destabilize regulatory predictability by pointing out that many federal agency actions are immediately challenged when they are issued; that court decisions upholding regulations may be binding precedent on later cases brought by newcomers; that existing court decisions upholding regulations should not be set aside simply because they were upheld pursuant to the Chevron deference doctrine; and that the courts have expertise and are charged in general with interpreting laws, even when the laws involve very technical subject matter areas or regulated industries.
Nonetheless, eliminating judicial deference to expert agency actions and allowing lawsuits challenging long-standing existing regulations by industry newcomers at the time the regulations are applied to them reduces regulatory predictability both for administrative agencies and the industries that they regulate. This includes regulations of multiple federal agencies affecting parcel shippers and their operations.
Congress can address this potential uncertainty by writing clearer, less ambiguous laws; establishing different statutes of limitations for challenging agency actions; and by writing the Chevron doctrine into law so as to require the courts to defer to reasonable agency interpretations of the laws that they administer. Whether it either will or actually wants to do so remains to be seen.
Stay tuned!
Andrew M. Danas is Partner, Grove, Jaskiewicz and Cobert, LLP. Visit www.gjcobert.com or email adanas@danaslaw.com for more information. The information contained in this article is intended to be general background information. It does not constitute and should not be relied upon as legal advice. Readers should contact a qualified attorney should they have a specific legal question.
This article originally appeared in the September/October, 2024 issue of PARCEL.
