The Nickel Report

The Chevron doctrine – the bedrock principle of administrative law under which courts afforded deference to administrative agency interpretations in the face of statutory ambiguity – is no more.  On June 28, 2024, the U.S. Supreme Court issued a long-anticipated decision that addresses the authority of regulatory agencies to dictate policy and the extent to which courts will exercise their own judgment as to the meaning of a statute and how that may bound agency decisions. 

For federal agencies seeking to complete rulemaking before the end of the Biden Administration, the clock is ticking, and a number of important deadlines are fast approaching. One of the most important deadlines could be the Congressional Review Act’s (CRA’s) so-called “look-back” provision.

The CRA mandates agencies provide Congress an opportunity to review and possibly overturn rules. To overturn a rule, both houses of Congress must pass a joint resolution of disapproval, and it must be signed by the President. If a CRA resolution is enacted, it invalidates the rule in question and bars the agency from issuing another rule in “substantially the same form” as the disapproved rule. 5 U.S.C. § 801(b)(2). If a rule has already taken effect by the time it is set aside via the CRA, it will no longer be in effect and “shall be treated as though such rule had never taken effect.” 5 U.S.C. § 801(f).

President Biden issued his second veto late last week. The President’s second veto protects a U.S. EPA rule that went into effect on March 20, 2023. That rule redefines “waters of the United States” (WOTUS), and at a high conceptual level, returns the Agency’s interpretation of WOTUS to that of the Obama administration, an interpretation that was revoked and replaced by the Trump administration.

This matter has been hotly contested in the federal courts. Indeed, the U.S. Supreme Court is poised to issue a ruling within the next several weeks on Sackett v. EPA, a decision which could substantially revise and narrow the Agency’s definition of “waters of the United States.” The Court’s decision here could send the Biden administration’s revised definition of WOTUS back to EPA for changes needed in-line with the Court’s decision, if and when issued.

President Biden issued his first veto today. Biden’s veto returns to Congress a joint resolution that attempts to nullify a recent rule from the Department of Labor regarding consideration of Environmental, Social, and Governance (ESG) factors when investing in retirement accounts. This rule went into effect on January 30, 2023, and allows for retirement plan fiduciaries to consider ESG factors when selecting investments and exercising shareholder rights. Some have said ESG investing is controversial because it allows for retirement plan fiduciaries to consider factors such as climate change and equity instead of focusing solely on maximizing financial returns; while others have argued that past measures prohibiting the consideration of ESG factors are equally problematic.

Beginning with the inauguration of Ronald Reagan in 1983, each newly inaugurated president from a different political party than his predecessor has ordered the withdrawal from the Office of the Federal Register (OFR) of all pending regulations that have not yet been published.  86 Fed. Reg. 7425 (Jan. 28, 2021) (Biden); 82 Fed. Reg. 8346 (Jan. 24, 2017) (Trump); 74 Fed. Reg. 4435 (Jan. 26, 2009) (Obama); 66 Fed. Reg. 7702 (Jan. 24, 2001) (Bush); 58 Fed. Reg. 6074) (Jan. 25, 1993) (Clinton); 46 Fed. Reg. 11,227 (Feb. 16, 1981) (Reagan). The incoming presidents have used this approach to advance their policies as opposed to being constrained by the policies of their predecessors reflected in such “midnight rules.” The D.C. Circuit, in Humane Society v. U.S. Dept. of Agric., No. 20-5291 (D.C. Cir. July 22, 2022), has limited the rules that can be withdrawn under this long-standing approach. 

On November 22, 2017, Environmental Protection Agency (EPA) Administrator Pruitt signed a notice denying petitions to change the “point of obligation” under the Renewable Fuel Standard (RFS) program away from refiners and importers.  The notice, which was sent to the Federal Register for publication, provides a broad overview of EPA objections to the petitions.  EPA also posted on its website a final decision document explaining its denial in detail.

The Administration’s proposed 30 percent reduction to EPA’s operating budget has raised many questions.  Will it happen?  How would it impact operations?  Are all EPA programs equally affected?   The final answers will come at the end of a lengthy congressional process, but last week’s hearing provided clues that any final cuts could be significantly less than the Administration’s request.  But first, it’s worth a quick review of the federal budget process.