By Christina Manfredi McKinley
On July 31, 2024, the Pennsylvania Chamber will offer a free webinar addressing the effect on the business community of three significant administrative law cases from the Supreme Court’s recently concluded term: Loper Bright, Corner Post, and Ohio v. EPA.
Moderated by the Chamber’s General Counsel and Vice President of Government Affairs Megan Martin, this experienced panel will discuss and debate some of the likely consequences for Pennsylvania’s business community in this new frontier of administrative law. Whether individually or collectively, the import of these cases on the existing administrative state cannot be understated. Particularly for businesses, which nearly always are subject to federal regulations in some capacity, these cases create both significant opportunities and corresponding risks.
The United States is, in part, governed federally by what has come to be known as “the administrative state.” That term refers to the network of administrative agencies—operating under the direction of the Executive Branch—that frequently write, interpret, and enforce their own rules, which, in turn, apply to the communities they regulate. The administrative state is expansive and includes agencies touching on nearly every facet of American life, from tax to immigration, the environment to government land, and labor to finance.
This past term, the United States Supreme Court (“SCOTUS”) handed down a number of decisions, which, individually and collectively, have the potential to reshape the administrative state as we know it:
- In Loper Bright v. Raimondo, SCOTUS overruled its 1984 decision in Chevron USA, Inc. v. Natural Resources Defense Council. That decision was the seminal case creating what had long been known as Chevron deference. It required courts interpreting claims brought under the Administrative Procedure Act to apply a two-step process: (1) did the statute at issue have an ambiguity?; and (2) if so, was the agency’s interpretation of that ambiguity reasonable? Under Loper Bright, a reviewing court now is directed to interpret statutory ambiguities itself, without deferring to the agency’s interpretation.
- In Corner Post Inc. v. Board of Governors, the Court held that agency rulemaking may be challenged long after a rule is finalized. Previously, most appellate courts that had addressed the issue (save one) had held that the six-year statute of limitations began to run from the publication of the rule. Corner Post holds instead that the statute of limitations for regulatory challenges does not start ticking until a plaintiff is injured by agency action.
- In Securities and Exchange Commission v. Jarkesy, SCOTUS held that under the Seventh Amendment, the Securities and Exchange Commission must bring civil-penalty actions for securities fraud in federal court—where the defendant is entitled to a jury. It can no longer bring those actions via an in-house administrative hearing.
- Finally, in Ohio v. Environmental Protection Agency, the Court temporarily halted the EPA’s “Good Neighbor” Rule, which applied EPA’s federal Clean Air Act implementation plan against the applicant states. Of importance to the Court’s holding was that commenters had raised concerns during the rulemaking process about what would happen if some states dropped out of the plan; however, in the Court’s view, EPA did not sufficiently address these concerns.
In terms of their ultimate effect on the business community, these cases create more questions than they answer, but it is safe to say that the ramifications might well be far-reaching. By way of example, businesses might feel emboldened to challenge agency rulemaking with renewed optimism for their chances of success in the wake of Chevron’s demise. Similarly, businesses that previously could not have challenged a rulemaking at the date of its publication (e.g., like Corner Post, which was not in existence at the time of the rulemaking), might be able to raise challenges years after a rule goes into effect.
Conversely, there is likely to be significantly more litigation, which leads to short-term uncertainty and more expense for the business community. So, too, longer rulemaking processes, with more interagency coordination and slower resolution timetables as rules wind their way through the courts system, likely will create added costs and short-term uncertainty for businesses.
These issues all cut both ways, however. For example, in years past, statutory interpretations frequently changed with different administrations. The new regime, in which courts will resolve many statutory ambiguities, is likely to create more long-term stability. Thus, the effect on business in the short-term, as these issues are resolved over years of litigation, is likely to be uncertainty and added cost. But in the long-term, compliance with agency mandates that are not subject to changing interpretations over different administrations ultimately is likely to save costs for businesses. The one certainty is that the discussion of these and other issues on July 31 at 10:30 a.m. is sure to be an interesting one. Please consider joining us.
Christina Manfredi McKinley is a shareholder with Babst Calland. She will be a panelist during the webinar, “What Every Business Needs to Know About Recent SCOTUS Rulings.”