The Chevron Doctrine: Who Gets to Decide What a “Source” is?

During the Supreme Court’s January 2024 session, Justices heard the oral argument for a case that could substantially transform the current landscape of administrative law. In Loper Bright Enterprises, Inc. v. Raimondo, the plaintiffs brought forth a challenge to the landmark Chevron Doctrine, which many believe lies at the core of the modern administrative state. The Chevron Doctrine holds that for issues of interpretations of ambiguous phrasing in legislation, deference is given to the federal agency rather than the courts. [1] The plaintiff’s oral arguments support the criticism that the Chevron Doctrine is based on a fundamentally problematic rubric of first-stage and second-stage interpretation, supported not only by the language of the Chevron opinion itself but also other administration-deference-matter-related legal precedent. However, the interpretation of the non-delegation doctrine and the debate surrounding the separation of powers is a macro-scoped issue that necessitates the Chevron Doctrine in the first place. Instead, alternative interpretive frameworks of non-delegation can help both courts and society reconcile constitutionality with practical governance.

The 1984 landmark case, Chevron v. Natural Resources Defense Council, in which the Court answered the question over definition of the term “stationary source” in the Clean Air Act Amendments of 1977, led to one of the most formative decisions for 20th century U.S. administrative law and developed the Chevron Doctrine. This case was prompted by the Environmental Protection Agency’s (EPA) diminutive change to the definition of “source” in 1985, which previously covered any significant changes to factories before changing to only covering entire plants and factories. [2] This change created loopholes for projects that would not have been approved under the previous guidelines. Natural Resources Defense Council, a non-governmental non-profit environmentalist organization, brought the challenge against the EPA for changing the definition of “source,” because the Clean Air Act of 1963 gave corporations more wiggle-room when making pollution-related decisions. The Supreme Court ultimately struck down the challenge in a unanimous 6-0 decision and ruled in favor of the EPA’s right to modify the definition of the word “source.” Writing for the court, Justice John Paul Stevens held that the process of administrative law is bifurcated into two stages: 1) “whether Congress has directly spoken to the precise question at  issue” and 2) “if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute.” [3]

In Loper Bright Enterprises, Inc. v. Raimondo (2024), the plaintiffs challenge both the methodology and the implication of this doctrine. First, plaintiffs claim that the process of identifying statutory ambiguities is flawed, thus the doctrine itself is unable to be applied consistently – or, in the words of their attorney Paul Clement, the “critical threshold question of ambiguity is hopelessly ambiguous.” Second, plaintiffs allege that its founding principles, as laid out in the eponymous Supreme Court case of 1984, are at odds with other constitutional principles regarding the separation of powers. [4]

In the infamous case USA v. Mead Corporation (2001), U.S. Customs Service brought a claim against the Mead Corporation over whether tariff classification rulings issued by the U.S. Customs Services are protected under the Chevron Doctrine. In his majority opinion ruling in favor of the Mead Corporation, Justice Souter introduced the idea of a “step zero” in application of the Chevron Doctrine. [5] “Step Zero” disqualified USA v. Mead from being an application of Chevron Doctrine since the ruling letters, which were the official document in dispute, did not go through the formal rulemaking process, thus they did not carry the same force of law as official agency regulations. Instead, Justice Souter classified the case as being under the jurisdiction of the Skidmore Doctrine, which states that agency interpretations are entitled to “judicial respect” according to the persuasiveness of the argument presented by the agency. [6]

USA v. Mead highlights the constitutional insufficiencies of the Chevron Doctrine. By grounding the decision on an attempted distinction between formal and informal lawmaking and the corresponding weight of law, the court naturally creates more questions than it answers. Is the formality of the rulemaking process the determining factor in deciding the applicability of the Chevron Doctrine? Does it necessarily correspond to so-called “weight of law” without consideration of impact? The ambiguity of these questions and the inevitable controversy that surrounds any potential answer are non-dismissable signs of the insufficiencies of this false dichotomy.

As scholars have criticized, this distinction ignores the lingering effects of administrative case law and implies that the choice between rulemaking and adjudication is mutually exclusive. [7] Rather, the two are often used interchangeably by administrative agencies depending on context. Taking perhaps the most contemporary issue will perfectly illustrate this point. The Securities Exchange Commission and the Consumer Financial Protection Bureau have both expressed explicit intent to regulate cryptocurrency. While the former has largely opted for an adjudication-based approach, the latter has recently submitted application for defining a market of  “general-use digital consumer payment applications” for public notice-and-comment, thus attempting to solve the issue of regulation of cryptocurrency via rulemaking. [8] By basing the applicability of the Chevron Doctrine on a rather unsustainable and unclarified distinction in USA v. Mead, the court has posed a shortcut for regulatory agencies regarding circumventing judicial review. On the other hand, there are plenty of landmark cases in which the Court has set guidelines for certain terms in the legislation-in-question that are later regarded as a step-by-step guide for relevant agencies. [9]

However, USA v. Mead illustrates how attempting to bifurcate or neatly divide up the stages of judgments in statutory interpretations is unsustainable. The first stage of judgment required by the Chevron Doctrine, which pertains to whether Congress has spoken directly to the issue, is itself an interpretation of the statute at hand. As past applications of the Chevron Doctrine show, issues of ambiguity can range from whether certain terms in the original legislation includes or excludes a certain class of emergent technologies to regulation-specific phrasing such as “relevant”, “apparent”, and “reasonable.” [10] While broader disputes involving technological confusion lean towards reliance on agency expertise, linguistic disputes are heavily discretionary and are oftentimes more of a test of whether the courts’ interpretation of “reasonable” matches (or overlaps) with the agency’s interpretation of rationality. It is evident that the Chevron Doctrine could be interpreted to almost any-and-all administrative legislations since all legislation is intended to provide an “intelligible principle” that can be flexibly adapted according to technological changes and agency expertise. [11] Even the defendants in Loper Bright Enterprises concede that the court should import certain modifications and limitations onto the Chevron Doctrine. [12]

Putting aside the legitimacy of the Raimondo plaintiffs’ criticism of the structure and history of the Chevron Doctrine, however, the larger issue at hand is the more macroscopic interpretative framework of the Constitution. One of the plaintiffs’ central arguments is that (over-)deference to administrative agencies violates the separation of powers, which underlies the entire Constitution and its supporting principle of the nondelegation doctrine. [13] The nondelegation doctrine is typically seen as an extension of the separation of powers and was formulated in A. L. A. Schechter Poultry Corp. v. United States, (1935). In this case, the Supreme Court struck down certain poultry regulations in the National Industrial Recovery Act of 1933 (NIRA) – a major touchstone of President Franklin Roosevelt’s New Deal legislation. [14] Chief Justice Evan Hughes, writing for the majority of the court, stated that “Congress is not permitted to abdicate or to transfer to others the essential legislative functions with which it is thus vested." [15] Hughes accurately summarizes the major premise that underlies many modern legal attempts to shrink (and sometimes overturn) the administrative state and its powers.

Despite this, as Justice Kagan points out, there is an alternative interpretation of the basis of administrative powers that sees it as the federal government granting discretionary powers to experts who are more equipped to deal with technical issues. Clement, arguing unsuccessfully against this point, attempted to differentiate between discretion and delegation. While delegation is technically in violation of the Constitution, discretion allows the agency to operate freely along the guidelines of “proper construction” of “certain statutory terms” provided by the court. [16] This attempted bifurcation unfortunately raises the same issues that Clement posed before: it is attempting to divide the interpretative process into parts. [17] If the courts were to provide a “properly constructed” definition of “stationary sources” in the Chevron case, it would merely invite more cases regarding whether following regulatory actions align with such a definition that ultimately does not clarify the issue of administrative power in the modern age.

The notion that the Supreme Court can ever comfortably draw a stable and sustainable legal boundary around statutory terms is absurd because almost every case that comes before the Supreme Court involves a dispute regarding the definitions of certain statutory terms. One could even go so far as to suggest that the cases that are denied certiorari by the High Court despite the fact that they involve such controversies signals the Court’s agreement with the interpretation of the statutory terms by the lower courts as demonstrated through the impact of the shadow docket rulings. [18] The plaintiffs’ failed suggestion that Chevron Doctrine encourages delegation instead of allowing for discretion raises the question, what exactly does the nondelegation doctrine entail?

Though seemingly simple on its surface, the nondelegation doctrine relies on a more complex interpretive framework of the Constitution and the administrative state. Fundamentally, it requires a Formalist reading of the Constitution which would require the state to strictly adhere to the structure laid out in the Constitution: the legislative branch is responsible for making the laws whereas the executive branch is responsible for enforcing them. [19] There are two strains of counter argument to this issue. Firstly, viewing administrative agencies strictly as part of the executive branch is impractical and highly dismissive of the actual role that the administrative state plays in the legal landscape. [20] Secondly, we can amend insufficiencies or overreaches of the administrative state by introducing more branch-unified approaches, such as administrative courts, if our true aim is to preserve the legitimacy of democracy that underlies the founding of the separation of powers doctrine.

The first counter argument focuses on the multiplicity of the administrative agency’s functions. The fundamental structure of administrative agencies are largely laid out by the Administrative Procedural Act, which provides guidance on administrative procedures. The Act allows for two routes: rulemaking and adjudication. In the former capacity, the agency acts through legislative fashion because it includes any agential efforts “designed to implement, interpret, or prescribe law or policy” or to “describe the organization, procedure, or practice requirements” of any agency and thus very much carries future-orienting effects. [21] In fact, a legislative act cannot take effect until agency efforts have been applied to fully determine its boundaries and definitions. Execution and construction of the law are inseparable and oftentimes two-in-one processes. This notion is contained within an intuitive legal understanding, as evident from President Andrew Jackson’s infamous comment that “John Marshall has made his decision, now let him enforce it,” which highlights the dependence of the judicial branch upon the executive. [22]

In the latter capacity of adjudication, the role can be seen as reversed. Agencies often conduct interpretative work in order to advance a case-specific decision. Adjudication often occurs in the form of injunctions, which is also a form of relief that can be granted by courts. This is not to say that rulemaking and adjudication always fit nicely into the legislative-judicial bifurcation model; rather, they are often interchangeably employed and one simultaneously performs the function of the other. For example, SEC v. Ripple (2023) is often read as a sort of “forward guidance” since the SEC’s arguments lay out its general guidelines for crypto asset management. [23] Thus, it can be indicative as to what kind of projects will or won’t be challenged by the current administration and serve as a form of rulemaking with future-oriented impacts. Conversely, rulemaking sets up the framework under which future adjudication will likely take place.

The second counter-argument takes on a much more practical dimension of the issue. As Justice Kagan briefly acknowledges in the oral argument of Loper Bright Enterprises v. Raimonado, regardless of the constitutionality of the situation, much of our current governance is already carried out by the administrative state. [24] With the increasing speed of progress in technology and other relevant fields, courts have also become increasingly reliant on amicus briefs filed by relevant agencies, experts, and private firms. [25] Though some may view the court’s increasing reliance on non-judicial expertise as a loss of judicial independence, it also signals that the law is taking on more relevant and nuanced matters of everyday life. Those worried about the unconstitutionality of having unelected officials deciding statutory interpretations seem to ignore that regulatory agencies are equally as removed from authentic democratic election as those sitting on the bench, if not more so. [26]

The challenge to the Chevron Doctrine belongs to  a group of a series of recent attacks on the administrative state, including SEC v. Jarkesy (2023)and Consumer Protection Financial Bureau v. Community Financial Services of America (2023),which both posed challenges to regulative agencies’ abilities to properly carry out their designated functions. [27] Though the justices consistently emphasize and signal that the deconstruction of the administrative state prepares and encourages a return of power to the people as represented by the legislative branch, it is difficult to reconcile the outsized impact of the decisions themselves. Can the court ever act with “humility”, as Justice Kagan insists, when it holds interpretative power over the document that fundamentally structures our government and everyday lives?

Edited by Sierra Romero

[1] Transcript of Oral Argument, Loper Bright Enterprises v. Raimondo (22-452). Oyez. https://www.oyez.org/cases/2023/22-451

[2] Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984)

[3] Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984)

[4] Transcript of Oral Argument, Loper Bright Enterprises v. Raimondo (22-452). Oyez, retrieved at https://www.oyez.org/cases/2023/22-451

[5] United States v. Mead Corp., 533 U.S. 218 (2001)

[6] Cass R. Sunstein, "Chevron Step Zero," Virginia Law Review 92, no. 187 (2006): PAGE NO.

[7] M. B. Troiano, “Rulemaking or Adjudication in Administrative Policy Formation: Rock versus Hard Place?” [Note], 13 Duq. L. Rev. 967 (1975).

[8] M. B. Troiano, “Rulemaking or Adjudication in Administrative Policy Formation: Rock versus Hard Place?” [Note], 13 Duq. L. Rev. 967 (1975).

[9] Sec. & Exch. Comm'n v. Ripple Labs., 20 Civ. 10832 (AT) (S.D.N.Y. Oct. 3, 2023);

Securities and Exchange Commission v. Coinbase, Inc., 1:23-cv-04738, (S.D.N.Y.);

Consumer Financial Protection Bureau, Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications, 12 CFR Part 1090, RIN 3170-AB17: Consumer Financial Protection Bureau, 2023; SEC v. W.J. Howey Co., 328 U.S. 293 (1946);

National Cable & Telecommunications Ass'n v. Brand X Internet Services, 545 U.S. 967 (2005)

[10] United States v. Mead Corp., 533 U.S. 218 (2001)

[11] Loving v. United States, 517 U.S. 748, 771 (1996)

[12] Transcript of Oral Argument, Loper Bright Enterprises v. Raimondo (22-452). Oyez. https://www.oyez.org/cases/2023/22-451

[13] Transcript of Oral Argument, Loper Bright Enterprises v. Raimondo (22-452). Oyez. https://www.oyez.org/cases/2023/22-451

[14] A. L. A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935)

[15] A. L. A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935)

[16] Transcript of Oral Argument, Loper Bright Enterprises v. Raimondo (22-452). Oyez. https://www.oyez.org/cases/2023/22-451

[17] Transcript of Oral Argument, Loper Bright Enterprises v. Raimondo (22-452). Oyez. https://www.oyez.org/cases/2023/22-451

[18] Vladeck, Stephen. The shadow docket: How the Supreme Court uses stealth rulings to amass power and undermine the republic. (New York: Basic Books, 2023), PAGE NO.

[19] Wurman, Ilan, “Constitutional Administration,” Stanford Law Review 69, no. 359 (2017)

[20] Wurman, Ilan, “Constitutional Administration,” Stanford Law Review 69, no. 359 (2017)

[21] Administrative Procedure Act, 5 U.S.C. §§ 551–559.

[22] Worcester v. Georgia, 31 U.S. 515 (1832)

[23] Sec. & Exch. Comm'n v. Ripple Labs., 20 Civ. 10832 (AT) (S.D.N.Y. Oct. 3, 2023)

[24] Transcript of Oral Argument, Loper Bright Enterprises v. Raimondo (22-452). Oyez. https://www.oyez.org/cases/2023/22-451

[25] Salzman, Ryan, Christopher J. Williams, and Bryan T. Calvin, “The Determinants of the Number of Amicus Briefs Filed Before the U.S. Supreme Court, 1953 – 2001,” The Justice System Journal, Vol.32, no.3 (2002)

[26] Wurman, Ilan, “Constitutional Administration,” Stanford Law Review 69, no. 359 (2017)

[27] Reply of Petitions, Security and Exchange Commission v. George Jarkesy, No. 22-859 (U.S. Nov.13, 2023) https://www.supremecourt.gov/DocketPDF/22/22-859/289467/20231113164043876_22-859%20SEC%20v.%20Jarkesy.pdf; Reply of Petitioners, Consumer Protection Financial Bureau v. Community Financial Services of America, No. 21-50826 (U.S. October 19th, 2022) https://www.ca5.uscourts.gov/opinions/pub/21/21-50826-CV0.pdf