Sugarman: Change coming to judicial review of agency action in Indiana?

Two cases currently pending before the United States Supreme Court have the potential to change the face of administrative law at the federal and, perhaps, state level by eliminating or significantly curtailing Chevron deference. Chevron deference was spawned by the Court’s decision in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). In that case, Justice John Paul Stevens delivered the opinion of six members of the Court (the other three recused) that created a two-step process for the judicial review of an executive agency’s interpretation of statutes the agency administers. Id. at 842 (reviewing the Environmental Protection Agency’s interpretation of “stationary sources” under the Clean Air Act) In the first step, reviewing courts employ traditional tools of statutory construction to determine if Congress has directly and unambiguously spoken to the question at issue. Id. 842-43. If Congress’s intent is clear, then the reviewing court may not perform additional inquiry. Id. But if the reviewing court determines that “the statute is silent or ambiguous with regard to the specific issue,” then the reviewing court must determine if the agency’s interpretation is based on “a permissible construction of the statute.” Id. at 843. In pronouncing this test, the court expressly noted that it had “long recognized that considerable weight should be accorded to an executive department’s construction of a statutory scheme it is entrusted to administer, and the principle of deference to administrative interpretations.” Id. at 844, 865.

Every environmental practitioner is aware of Chevron, its broad grant of deference to agency interpretations and how eager EPA is to cite Chevron in support of its interpretations. Indeed, Chevron is one of the most widely cited cases in jurisprudential history. A 2017 empirical study of how widespread reliance on Chevron is notes that the case has been “cited in more than 80,000 sources available on Westlaw, including roughly 15,000 judicial decisions and nearly 18,000 law review articles and secondary sources.” Barnett & Walker, “Chevron in the Circuit Courts,” 116 Mich. L. Rev. 1, at * 2 (2017). Other empirical studies have noted that Chevron is the mostly widely recognized tool of statutory construction identified by drafters of federal statutes and agency rules. Gluck & Bressman, “Statutory Interpretation from the Inside — An Empirical Study of Congressional Drafting, Delegation, and Canons: Part I,” 65 Stan. L. Rec. 901 (2013); Walker, “Inside Agency Statutory Interpretation,” 67 Stan. L. Rev. 999 (2015).

But Chevron may soon find itself on the growing pile of discarded SCOTUS precedent. On Jan. 17, SCOTUS heard oral argument in the consolidated cases of Loper Bright Enterprises v. Raimondo (No. 22-451) and Relentless, Inc. v. Department of Commerce (No. 22-1219). The court specifically granted certiorari to determine “(w)hether the Court should overrule Chevron or at least clarify that statutory silence concerning controversial powers expressly but narrowly granted elsewhere in the statute constitute an ambiguity requiring deference to the agency.” The court declined to review the narrower question Petitioners presented regarding the proper application of the statute at issue.

Oral argument in the consolidated cases lasted for 3½ hours. Summarizing that advocacy, the substantive briefing and the armada of amicus briefing (I counted 62) are beyond the scope of this article. However, I can distill and simplify the arguments. The Petitioners argued that Chevron violates the Constitution’s separation of powers principle by ceding the legislative power to write laws and the judicial power to say what the law is to the executive branch. In this regard, Petitioners’ arguments followed the scholarship of Professor Philip Hamburger and Justice Brett Kavanaugh — see Hamburger, “Chevron Bias,” 84 Geo. Wash. L. Rev. 1187 (2016) and Kavanaugh, “Fixing Statutory Interpretation,” 129 Harv. L. Rev. 2118 (2016) — and opinions expressed by Justices Clarence Thomas and Neil Gorsuch. See Baldwin v. United States, 140 S. Ct. 690 (2020) (Thomas, J. dissenting from denial of cert.); Gutierrez-Brizuela v. Lynch, 834 F.3d 1142 (10th Cir. 2016) (Gorsuch, J. concurring). Petitioners also argued that Chevron is inconsistent with Section 706 of the Administrative Procedure Act, which provides that courts must decide all questions of law — including questions of statutory interpretation — when reviewing an agency action for lawfulness. On the other hand, the Respondents argued that Chevron is protected by stare decisis and rule-of-law principles. They also argued that the court has already developed doctrines that soften Chevron (e.g., the major questions doctrine). The author takes no side in the debate here other than to say that he regularly discusses the merits of Chevron’s demise within his own practice group. Instead, let’s explore what overruling Chevron may mean to Indiana administrative law.

I have identified no published decision that specifically adopts Chevron deference when Indiana courts review agency action based on Indiana statutes. However, when Indiana courts review the actions of Indiana agencies interpreting Indiana law, they should apply the framework explained by our Court of Appeals of Indiana in Sullivan v. Day, 661 N.E.2d 848 (1996), which was specifically adopted by the Indiana Supreme Court in Sullivan v. Day, 681 N.E.2d 713 (1997). This framework includes the following steps: (1) judicial determination of whether the disputed statutory language is ambiguous; (2) interpretation of that language using “ordinary and common usage”; and (3) in cases where plain language does not resolve the issue and there is no binding precedent, then courts are to consider the “regulations promulgated pursuant to the statutory language by the agency charged with the statute’s enforcement.” 661 N.E.2d at 853; 681 N.E.2d at 716. In considering agency interpretation, contrary to Chevron deference, there is no requirement of absolute (or “reflexive”) deference to the agency’s interpretation; instead, courts “may” give weight to these interpretations. Id.; accord Indiana Code § 4-21.5-5-14(d); LTV Steel Co. v. Griffin, 730 N.E.2d 1251 (Ind. 2000); Ind. Dept. of Envtl. Mgmt. v. Steel Dynamics, Inc., 894 N.E.2d 271 (Ind. Ct. App. 2008). This standard of review is not likely to change regardless of the outcome of Loper and Relentless.

However, when Indiana courts are reviewing agency action that involves interpretation of federal law or regulations, Chevron is frequently invoked. See, e.g., Nat. Res. Def. Council v. Poet Biorefining-North Manchester, LLC, 15 N.E.3d 555 (Ind. 2014) (applying Chevron deference to interpretation of “chemical process plants” under the federal Clean Air Act); Ind. Dept. of Envtl. Mgmt. v. Constr. Mgmt. Assocs., LLC, 890 N.E.2d 107 (Ind. Ct. App. 2008) (applying Chevron deference to analysis of “public water system” under the federal Safe Drinking Water Act); Walker v. DaimlerChrysler Corp., 856 N.E.2d 90 (Ind. Ct. App. 2006), trans. denied (applying Chevron to the federal Magnuson-Moss Warranty Act); Ind. Bell Tel. Co., Inc. v. Ind. Util. Regulatory Comm’n, 764 N.E.2d 734 (Ind. Ct. App. 2002) (applying Chevron to federal Telecommunications Act of 1996); Parkview Hosp., Inc. v. Roese, 750 N.E.2d 384 (Ind. Ct. App. 2001) (applying Chevron to federal Social Security Act). If the Supreme Court jettisons or curtails Chevron, then, obviously, Indiana courts would need to modify their analysis accordingly.

Finally, the General Assembly is currently considering House Bill 1003. Among other changes to Indiana’s Administrative Orders and Procedures Act, the bill seeks to add a new Section (b) to Indiana Code § 4-21.5-5-11 — which governs judicial review of agency action — to clarify that courts “shall decide all questions of law,” including questions of statutory and regulatory interpretation, “without deference to any previous interpretation made by the agency.” If enacted, this amendment will alter both the Sullivan standard discussed above and the application of Chevron in Indiana.•

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Bradley R. Sugarman is chair of the Environmental Law Group at Bose McKinney & Evans LLP. Opinions expressed are those of the author.