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The Checks and Balances Letter: December 2018
From Ballotpedia
The Checks and Balances Letter delivers news and information from Ballotpedia’s Administrative State Project, including pivotal actions at the federal and state levels related to the separation of powers, due process and the rule of law.
This edition:
The dusky gopher frog had its day in court—and it won’t be its last. In this issue of Checks and Balances, we examine the United States Supreme Court’s decision in Weyerhaeuser v. United States Fish and Wildlife Service and what it means for the dusky gopher frog and judicial review of agency actions. We also report on the potential reconsideration of Auer deference by the U.S. Supreme Court as well as the new director in charge of the Consumer Financial Protection Bureau (CFPB).
Wrapping up your holiday shopping? This issue also features a closer look at new state sales tax regulations in Colorado that have drawn the ire of local businesses. We also highlight a civil asset forfeiture case out of Indiana, and recent changes to administrative processes in Wisconsin, including the end of judicial deference and sue-and-settle practices.
The Checks and Balances Letter
In Washington
U.S. Supreme Court to reconsider judicial deference
- What's the story? The U.S. Supreme Court on Dec. 10 granted cert in Kisor v. Wilkie to reconsider whether courts should defer to an agency’s interpretation of its own regulations. The precedents at issue are Bowles v. Seminole Rock & Sand Co (1945) and Auer v. Robbins (1997), both of which figure prominently in the expansion of the administrative state. The court has previously denied requests to reconsider both cases.
- In Kisor v. Wilkie, veteran Marine James Kisor is challenging the Veteran Administration’s decision to delay the effective date of his disability benefits. (The agency denied him benefits for PTSD in 1983 but partially reversed that decision in 2006.) Although the VA officials, on reconsideration, accepted Kisor’s diagnosis, they denied him retroactive benefits (going back to his initial 1983 claim). According to the agency, Kisor failed to present the “relevant” records required to do so. At issue is the VA’s interpretation of “relevant” as applied in the Kisor case.
- Citing Auer and Seminole Rock, the circuit court had upheld a veterans court (which specializes in PTSD cases), ruling that the VA’s interpretation of “relevant” was neither erroneous nor inconsistent with its regulatory framework.
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SCOTUS vacates and remands Weyerhaeuser Company v. United States Fish and Wildlife Service
- What's the story? The U.S. Supreme Court ruled 8-0 on November 27 that courts “must assess” whether the Fish and Wildlife Service (FWA) properly exercises its discretion when designating critical habitat under the Endangered Species Act. Justice Kavanaugh did not take part in the decision.
- Although narrow in scope, the ruling is widely seen as a challenge to the longstanding doctrine of Chevron deference, which holds that federal courts yield to agency interpretations of the statutes they administer. Such deference is regarded as a major factor in the expansion of agency powers and the rise of the administrative state. The case Weyerhaeuser Company v. United States Fish and Wildlife Service, involves the FWS designation of some 1,500 acres in Louisiana as critical habitat for the dusky gopher frog—which hasn’t been seen there for more than 50 years. Nonetheless, the Fifth Circuit Court of Appeals affirmed the district court’s ruling to uphold the designation as agency discretion.
- A unanimous Supreme Court vacated the Fifth Circuit ruling and remanded the case for a reconsideration of whether the agency’s action was arbitrary, capricious, or an abuse of discretion.
- The justices did not define limits of agency discretion, but instead said that the courts “must assess” whether the agency’s exercise of discretion was based on a consideration of relevant factors, including costs and benefits.
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Kraninger confirmed as CFPB director
- What's the story? he United States Senate voted 50-49 on December 6 to confirm Kathy Kraninger as director of the Consumer Financial Protection Bureau (CFPB).
- Kraninger replaces Acting Director Mick Mulvaney, who has led the CFPB since November 2017—in addition to his role as director of the Office of Management and Budget.
- Kraninger has served in OMB since March 2017. She previously worked in the United States Senate and the U.S. Department of Homeland Security.
- The CFPB structure, which includes a single director who does not answer to either Congress or the White House, has been repeatedly challenged as unconstitutional.
- A three-judge panel of the United States Court of Appeals for the District of Columbia Circuit ruled in October 2016 that the agency’s structure was unconstitutional. However, the full court reversed the panel decision in January 2018. In a different case, Judge Loretta Preska of the United States District Court for the Southern District of New York declared in June 2018 that the agency’s structure was unconstitutional. The CFPB in September appealed Judge Preska’s decision to the United States Court of Appeals for the 2nd Circuit.
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In the States
Indiana civil asset forfeiture case challenged
- What's the story? The U.S. Supreme Court heard oral arguments on November 28 in Timbs v. Indiana, a case challenging “civil asset forfeiture” as an excessive seizure of private property by law enforcement. Under civil asset forfeiture, law enforcement routinely seize cars, cash and other property as alleged proceeds of crime. The property may be seized even if an individual has not been convicted of a crime.
- The Indiana Supreme Court ruled that the excessive fines clause of the Eighth Amendment did not apply in Indiana, and that the police were allowed to seize Timbs’ vehicle.
- Timbs’ lawyers argue that the seizure of Timbs’ Land Rover constituted an excessive fine in violation of the Eighth Amendment, and likewise violated the Fourteenth Amendment rights to due process and equal protection.
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Wisconsin Legislature reins in the administrative state
- What's the story? The Wisconsin Legislature on December 5 approved several major changes to administrative processes, including eliminating judicial deference to state agencies, abolishing sue-and-settle practices, and setting new standards for agencies’ regulatory guidance documents.
- Governor Scott Walker (R) had not issued a statement on whether he would sign the legislation as of December 11.
- Judicial deference: The legislation, if enacted, would codify the Wisconsin Supreme Court’s ruling in Tetra Tech, Inc. v. Wisconsin Department of Revenue, which struck down the practice of courts deferring to agency interpretations of the statutes they administer.
- Guidance documents: If enacted, the legislation would require agencies to solicit public comments on guidance documents (which interpret regulations but do not carry the force of law). In some cases, individuals would be allowed to petition agencies to issue regulations in place of guidance. The legislation states that guidance does not carry the force of law and is subject to the same standard of judicial review as promulgated rules. Agency heads must sign each guidance document and make them available to the public online. Guidance that does not meet the new statutory requirements within six months must be rescinded.
- Sue-and-settle: The legislation would end sue-and-settle in the state—a practice by which outside groups sue an agency in order to reach a settlement on terms favorable to the regulatory goals of both.
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Colorado businesses call for legislative solution to Wayfair sales tax regulations
- What's the story? Small businesses in Colorado are calling for the state legislature to act to simplify the state’s sales tax system after new sales tax regulations for both in-state and out-of-state retailers promulgated by the state Department of Revenue (DOR) took effect on December 1, 2018. The DOR instituted a grace period through May 31, 2019, for retailers to comply with the new regulations.
- The new regulations will require both in-state and out-of-state retailers (with limited exception) to collect and remit sales taxes based on a Colorado customer’s address. That means retailers will be required to assess 683 possible sales tax rates across local jurisdictions in Colorado, according to The Denver Post.
- The state’s Department of Revenue (DOR) crafted the regulations in response to the United States Supreme Court’s decision in South Dakota v. Wayfair, which held that states may require online retailers to collect sales taxes from customers regardless of whether the business had a physical presence in the state.
- Small businesses have argued that they do not have the rime or resources to manage the administrative burden and that the state legislature needs to rework the sales tax system before the DOR promulgates new regulations.
- Only out-of-state retailers who do at least $100,000 in sales or 200 transactions annually in Colorado will be required to comply with the new rules. All in-state businesses must comply.
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Responses to Weyerhaeuser: the future of judicial review
The United States Supreme Court, in Weyerhaeuser v. U.S. Fish and Wildlife Service (FWS) held that agency designation of critical habitat under the Endangered Species Act is subject to judicial review. The court did not define the parameters of agency discretion, but did find that courts “must assess” such designations.
Below are responses to the question of how the Weyerhaeuser decision will affect judicial review. Damien Schiff, a senior attorney for the Pacific Legal Foundation, wrote in The Hill that the Weyerhaeuser decision was a victory for proponents of judicial review as a tool for ensuring the accountability of administrative actions:
| “[T]he importance of this Supreme Court decision extends beyond environmental protection. It also contains an important defense of judicial review of decisions made by executive branch agencies — a critical step in holding those agencies accountable. Ultimately, this defense of judicial review may end up being the most important part of this ruling. … This is more than an esoteric question of administrative law — it’s an important victory for freedom and agency accountability. Nowadays, most government infringements of liberty occur as the result of unaccountable bureaucratic rule-making and adjudication by agencies. Perhaps the worst form of judicial deference, lamentably common in the lower federal courts, is the deference of not reviewing agency action at all.” |
Dan Rohlf, an environmental law professor at Lewis & Clark Law School, observed in E&E News that the Weyerhaeuser decision may chill agencies’ exercise of their discretion:
| "This is an indication that the Supreme Court was leaning more toward reviewability of agency decisionmaking. I could see this ruling, if not having precedent, either indicating a trend or having influence over future decisions. … Rulings like this, as a practical matter, can tend to make agencies more conflict-averse. So if an agency thinks it might be challenged, it may do things to try to avoid that challenge. To the extent that happens, I think it would be an unfortunate outcome of this decision." |
Roger Pilon, vice president for legal affairs at the Cato Institute, argued in Arizona’s Cronkite News that the Weyerhaeuser decision could protect property rights by strengthening judicial oversight of agency actions:
| “This was an important decision for property rights and for judicial oversight of agency action. Not only was it not critical habitat, it wasn’t even habitat for the frog. It hadn’t lived there for over 50 years. … If that rationale were allowed to stand, then there is no parcel of land in the United States that could not, with sufficient improvement, be made habitable for virtually any species. It would put the whole of the United States under the jurisdiction of the Interior Department … which is absolutely absurd.” |
Regulatory Tally
Federal Register
- The Federal Register in November increased by 7,379 pages, bringing the year-to-date total to 62,240 pages. Between 2009-2016, the year-to-date total at the end of November averaged 73,485 pages.
- The Federal Register included 158 proposed rules and 224 final rules during November 2018. The regulations covered a variety of topics, including videoconferencing for federal parole termination hearings, Medicare premium adjustments, and asylum policy changes.
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Office of Information and Regulatory Affairs (OIRA)
- OIRA’s recent regulatory review activity includes:
- Review of 36 significant regulatory actions. Between 2009-2016, the Obama administration reviewed an average of 47 significant regulatory actions each November.
- One rule approved without change; two rules withdrawn; recommended changes to 33 proposed rules.
- Review of 324 significant rules since January, compared to 207 significant rules during the same period in 2017.
- As of December 3, 2018, OIRA’s website listed 95 regulatory actions under review.
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Footnotes
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