A Court-Side Seat: SCOTUS Rulings, the Fiscal Responsibility Act and the October 2023 Calendar


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The Supreme Court issued 58 opinions in the October 2022 Term. Rulings in several cases will affect the practice of regulatory and administrative law either directly or indirectly, as is recounted below. Before the Court adjourned, it released its calendar of cases to be argued in October 2023, and of course, more cases will be scheduled after the Court returns.

Decisions Directly Affecting Administrative and Regulatory Law

 Axon Enterprise, Inc. v. Federal Trade Commission (decided April 14, 2023)
This case involves a standard federal agency enforcement practice usually administered by agency Administrative Law Judges. The petitioners, Michelle Cochran and Axon Enterprise, were cited for various regulatory violations by the SEC and the FTC. However, instead of submitting to the agencies well-established internal administrative enforcement processes, the petitioners challenged the authority of the agencies to utilize these procedures because there were serious concerns that these processes were unconstitutional; a federal statute, 28 USC Section 1331, provides that federal district courts have jurisdiction over claims having a basis in federal law. The Court, in an opinion by Justice Kagan, held that the review schemes provided by the Exchange Act and the FTC Act, do not displace the authority to hear cases provided by Section 1331. Justice Kagan employed the balancing factors set forth in the Thunder Basin case of 1994, see 510 US 200 (1994), to determine that the petitioners can resort to Section 1331. Justice Gorsuch would dispense with the Thunder Basin analysis because this federal statute provides all the authority that is needed. This is another decision that is reducing somewhat the scope and scale of the authority of federal regulatory agencies.

Sackett v. Environmental Protection Agency (decided May 25, 2023)
The U.S. Court of Appeals for the Ninth Circuit upheld the federal government’s authority to regulate, under the Clean Water Act (CWA), the wetlands being filled in by the Sacketts on their property. The EPA rules then provided that such wetlands could be subject to the EPA’s (and the U.S. Army Corps of Engineers’) regulatory power; they had a “significant nexus” to traditional navigable waters. The Court reviewed the long and complex history of the CWA and the many interpretations the agencies have made over the years. As the Court notes, the term “waters of the United States” has been the focus of three recent and intensive rulemakings since 2015, culminating in the significant nexus test being employed by the EPA and the Corps. The Court held that the proper test under the Act to decide whether a body of water, particularly wetlands, was subject to federal jurisdiction should be whether the wetlands in question have a surface connection to bodies of water that are waters of the United States in their own right so there is no clear demarcation between waters and wetlands. Accordingly, the EPA’s determination that the Sackett’s wetlands were also waters of the U.S. was overturned. The rejection of the significant nexus test was based on a close reading of the text of the CWA, which was enacted more than 50 years ago in 1972. While this decision reduces the scope and scale of EPA’s powers under the CWA, it does not foreclose the ability of Congress to amend the Act or States to change their own laws. This ruling will also affect many regulations that EPA and the Corps have promulgated over the years to implement the CWA.

Biden v. Nebraska (decided June 30, 2023)
Since the federal college loan program was established in 1958, the Congressional Budget Office reports that outstanding federal college loans now total $ 1.6 trillion. In 2022, the Secretary of Education took steps to establish the first comprehensive student loan forgiveness plan under the authority of the Higher Education Relief Opportunities for Students Act (HEROES) which was enacted in the wake of the September 11, 2001, terrorist attacks. Following the change in presidential administrations in 2021, the Department determined that the Secretary was authorized by the HEROES Act to cancel $430 billion in student loans. Several states challenged this action, and eventually the Eighth Circuit issued a nationwide injunction to halt this program. On appeal to the Supreme Court, the Court held, in a 6-to-3 decision, that: (a) the State of Missouri had standing to challenge these administrative actions in court; and (b) the HEROES Act does not provide the Secretary with the statutory authority to “draft a new section of the Education Act from scratch by waiving provisions root and branch and then filling the empty space with radically new text.” The question before the Court was not whether something should be done, but who has the authority to do it; for a decision of such magnitude and consequence, the authority must lie with the Congress or an agency having a clear delegation to do so. The Court states that the Major Questions Doctrine—described as “an identifiable body of law that has developed over a series of significant cases spanning decades”—can be employed to protect the separation of powers, and requires that this action be struck down. In dissent, Justice Kagan laments that today’s opinion “departs from the demands of judicial restraint.”

National Pork Producers Council v. Ross, Secretary of the California Department of Food and Agriculture (decided May 11, 2023)
The Court affirms the decision of the U.S. Court of Appeals for the Ninth Circuit that California Proposition 12, approved by the voters of California, does not violate the Commerce Clause. The California law forbids the sale of pork products in California when the pigs are bred and confined in a cruel manner. The petitioners argued that this new law violated the dormant Commerce Clause to the Constitution because it intruded on an area of interstate commerce outside the boundaries of California.

Because California is such an important market, the law will have extraterritorial effects which must be measured against the factors set forth in another Commerce Clause ruling, Pike v. Bruce Church, decided by the Court in 1970. Justice Gorsuch authored the main opinion, and there were a number of concurrences. He stated that “our cases have expressly cautioned against judges using the dormant Commerce Clause as a roving license” for federal courts to decide what activities are appropriate for state and local governments to make. He notes that the petitioners do not argue that the law was intended to discriminate against any out of state producers, and that Congress, if it chose to do so, could step in, and regulate. The concurring opinion of the Chief Justice states that the balancing test of the Pike case is still a valuable analytical tool, even though this could be a difficult task for the judiciary to perform. Justice Kavanaugh was more blunt: “California’s approach undermines federalism and the authority of individual states by forcing individuals and businesses in one state to conduct their farming, manufacturing and production practices in a manner required by the laws of a different state.”

Mallory v. Norfolk Southern Railway Company (decided June 27, 2023)
This is a personal injury lawsuit that was filed in Pennsylvania although the defendant is not incorporated in Pennsylvania, nor is the plaintiff a resident Pennsylvania, and it appears the injuries did not take place in Pennsylvania. However, the railroad, by law, was required to register to do business in Pennsylvania, making it subject to personal jurisdiction there. A divided Supreme Court reversed the decision of the Pennsylvania Supreme Court that asserting personal jurisdiction on such grounds is violative of the Due Process Clause of the U.S. Constitution, and that a 1917 case which supported jurisdiction was no longer operative. However, the Supreme Court held that the 1917 decision, Pennsylvania Fire Insurance v. Gold Issue Mining and Milling Company, had not been overturned, and the railroad had extensive business contacts with Pennsylvania. Justice Alito agreed that there was no reason to overturn the 1917 ruling in the Pennsylvania Fire Insurance case, but when the case returns to the Pennsylvania courts, a reexamination of the dormant Commerce Clause’s impacts on such jurisdictional claims would be in order.

Other Rulings Affecting Regulatory and Administrative Law
On June 22, 2023, the Court decided the case of United States v. Texas, which dealt with the evolving federal immigration law enforcement guideless of the U.S. Department of Homeland Security. The States of Texas and Louisiana, alleging substantial economic injuries if this policy is not terminated, argued that the guidelines violate two federal statutes that the Department is charged with enforcing. However, a majority of the Justices concluded that these States lacked standing to maintain this litigation and reversed the ruling of a Texas federal district court. Justice Kavanaugh remarked that “The States’ novel standing augment if accepted, would entail expansive judicial direction of the Department’s arrest policies.” Justice Alito dissented, noting that the majority opinion did not discuss why the Court’s recent standing ruling in the Greenhouse gas case of Massachusetts v. EPA, 549 US 497 (2007)—which expressed “special solicitude” for a state’s quasi-sovereign interests—did not merit more discussion. Has this decision, that has special significance in environmental litigation, “been quietly interred?”

On June 30, 2023, the Court decided the college admission case, Students for Fair Admission, Inc. v. President and Fellows of Harvard College. Justice Gorsuch’s concurring opinion stated that neither the Equal Protection Clause of the Fourteenth Amendment nor Title VI of the Civil Right Act of 1964 countenance racial criteria for admission of students to Harvard. He writes that Title VI prohibits only intentional discrimination,” and this includes a recipient of federal funds. This observation may have an impact on federal nondiscrimination policies that are evolving. Doubtless, there will be more discussion of this matter in the future.

The case of Department of Education v. Brown, et al. was decided on June 30, 2023, the same day that the Court released its opinion in the Biden v. Nebraska case. The plaintiffs were two individual borrowers seeking to enjoin the plan that was reviewed at length in Biden v. Nebraska. However, these litigants failed to demonstrate their standing to pursue this litigation. They were unable to assert any concrete interest; they could not show that any injured interest they had in a properly promulgated college loan forgiveness policy was “fairly traceable: to the defendants” actions.

Administrative Law Cases to be Argued in the Next Term
The Court has already scheduled some cases for oral argument in the October 2023 Term: Consumer Financial Protection Bureau v. Commercial Financial Services (Fifth Circuit), a challenge to the Bureau’s funding, and SEC v. Jarkesy, another Fifth Circuit ruling, holding that the SEC enforcement procedures violate the Seventh Amendment’s jury trial requirements. Finally, from the First Circuit, there is Loper Bright Enterprises v. Raimondo, challenging the use of Chevron to uphold a Department of Commerce fishing regulation.

The Fiscal Responsibility Act, the Mountain Valley Pipeline and the Separation of Powers
The Fiscal Responsibility Act of 2023 was enacted on June 3, 2023, and was made immediately effective. The law was a response to the debt limit issues hamstringing the Congress, and the bulk of its provisions address that problem. However, Section 324 of the Act authorizes the completion of the Mountain Valley Pipeline, which has been stalled by numerous lawsuits filed to stop its progress. While the latest appeals were pending in the Fourth Circuit, the Fiscal Responsibility Act was passed to strip jurisdiction over these complaints and to transfer appellate jurisdiction to the U.S. Court of Appeals for the District of Columbia Circuit. In addition, the Congress, in drafting the Act, ratified and approved all authorizations and approvals issued pursuant to federal law necessary for the construction and operation of the pipeline. Nevertheless, opponents of the pipeline again asked the Fourth Circuit to take action to stay the ongoing construction of the pipeline. A stay was granted on July 10, 2023, and an immediate appeal was made to Chief Justice Roberts. On July 27, 2023, the Supreme Court issued an order vacating the stays made by the Fourth Circuit. On that same day, the Fourth Circuit heard arguments as to whether the appeals should be dismissed because of the enactment of the Fiscal Responsibility Act. On August 11, 2023, the circuit court issued a ruling dismissing the case (Appalachian Voices, et al. v. the United States Department of the Interior). Judges Gregory and Wynn wrote concurring opinions. Judge Wynn agreed that the Act eliminated their jurisdiction, but at what cost, stating that “I wonder if Section 324 is a harbinger of erosion not just to the environment, but to our republic. That, only the Supreme Court can decide.” Judge Thacker, in his concurrence, remarked that “Congress’s use of its authority in this manner threatens to disturb the balance of power between co-equal branches of government … There must be a firm limit of Congress’s intrusion into the judicial branch, but only the Supreme Court can “give us an opinion that lays it out clearly.”


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