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Beyond Jarkesy there is the CFPB case, and there is Loper Bright, the case that has finally overturned Chevron. I would like to focus especially now on: Consumer Financial Protection Bureau v. Community Financial Services Association of America, aka the CFPB case, published in mid May.
CFPB was a loss for the cause of dismantling administrative agencies. A win for the deep state, if you will.
It is not always clear what the word "consumer" means in the financial world. In the vernacular, the term often seems to mean roughly "the little guy," the individual (and so non-institutional) borrower or investor. The CFPB is a generic watchdog. I discussed this agency's founded at some length here once before -- in July 2020, when I was doing a round-up of SCOTUS' output for the October 2019 term. That term, too, saw the Supreme Court rejecting a challenge to the bureau.
The funding of the CFPB is by design (Senator Warren's design) separate from the annual Congressional appropriations process.
In this case, several trade associations representing payday lenders and credit-access businesses brought an action. I think most people will agree that "payday lending" is a sleazy line. "I just need a few bucks to tide me over until my next payday" is an old temptation, on a par with "I just need one shot of whiskey to steady my nerves." Both of those temptations lead in much the same direction.
Payday lenders often secure their customers' bank account information, "so we can make automatic painless withdrawals after your paydays." Sometimes the lender re-submits the same request repeatedly after an NSF notice, which can lead to overdraft fees for the victims, uh, borrowers. To save themselves from this tyranny, the trade associations argued that the CFPB is unconstitutional due to its funding system.
The Fifth Circuit accepted that argument. The Supreme Court did not.
The statute authorizes the Bureau to draw public funds from a particular source—“the combined earnings of the Federal Reserve System”— in an amount not exceeding an inflation adjusted cap. 12 U. S. C. §§5497(a)(1), (2)(A)–(B).
Seven Justice agreed that this "fits comfortably within the historical appropriations practice described above." Who wrote the sensible opinion for this super-majority? Clarence Thomas. Kagan and Jackson wrote concurring opinions.
Alito wrote the dissent, this time joined only by Gorsuch. (Usually when one hears that a decision has come down 7 - 2, it is a good guess the dissenters are Alito and Thomas.)
Thomas, for the majority and as an originalist, began by quoting old dictionaries, including Samuel Johnson's and Noah Webster's, on the word "appropriation". Then there is some potted history of appropriations practice in the Mother Country. Even after the Glorious Revolution, he notes, when Parliament finally got rid of the Stuarts and secured over-all fiscal control for itself, it did not "micro-manage every aspect of the King's finance." An oddly suitable precedent for invocation in 2024.
That should suffice for treatment of CFPB.
Moving forward: what was 'Chevron deference' and what has changed now that we are told it is no more?
Back in 1981, the EPA changed the definition of the word 'source' as used in the Clean Air Act. Is the whole of a factory a 'source' of air pollution, or is each smokestack a 'source' in itself? On this ambiguity rode a lot of money. Companies wanted to be able to create new projects without going through an elaborate review process at the EPA, by modifying other parts of the same plant when they did -- crudely put, taking out a smokestack for every new one they created so the overall change in emissions was zero.
The EPA took industry's side on this interpretive question and the damned tree-huggers of the NRDC challenged it.
In 1984, the Supreme Court decided Chevron v. Natural Resources Defense Council. It set out a two-part test for when a court, including itself as the highest federal court, ought to defer to an administrative agency's interpretation of a statute.
Long-story short, the opinion in Chevron, written by Justice Stevens, said that the statute's plain language did not decide the matter, so the EPA's own reading of Congress' will must prevail so long as it represents a "permissible construction of the statute".
Chevron, then, was initially hailed as a victory by conservatives. It took some time for them to start acting butt sore about it. Don't expect the NRDC to get a do-over on the smokestack thing.
Fast forward: in June 2015, the US Supreme Court upheld the Obamacare health insurance mandates against constitutional challenge. This seems to have been a turning-point, though, in the significance of Chevron as a precedent. At this point of course it was a familiar precedent of more than 30 years. The court could have said, "in such matters of statutory construction, we defer to the administrative expertise of the relevant executive officials." That would have left the Obamacare scheme in place, but would have left it subject to being overturned when the Republicans won the next election. It didn't do that. It upheld Obamacare on terms that left it in place until such time as Congress should re-write the law, a change that the Trump administration repeatedly failed to secure.
Indeed, Justice Roberts, for the court, upholding the tax credits as a critical part of the broad statutory scheme, said,
"The tax credits are among the Act's key reforms, involving billions of dollars in spending each year and affecting the price of health insurance for millions of people. Whether those credits are available on the Federal Exchange is thus a question of deep 'economic and political significance' that is central to the statutory scheme; had Congress wished to assign that question to an agency, it surely would have done so expressly."
So there are matters too important, or central, to be left to Chevron. Justices have since felt free to pull the meaning of statutes out of their own bowels without reference to administrative discretion. And the implicit distinction there, in Roberts' words, a distinction between really-important interpretive questions and merely-ordinary interpretive questions, has proven difficult to define.
Note that the issue when one talks of Chevron is not deference on facts but deference on the law, specifically on the meaning of an agency's statutory mandates.
In May of 2023, SCOTUS granted cert specifically to reevaluate Chevron in Loper Bright. This is the decision that was handed down more than thirteen months later, in the end-of-session rush.
At other points in this four-panel discussion I have observed that certain decisions did NOT break down along party lines, in the 6-3 opposition one might expect. With regard to this case, Loper Bright Enterprises v. Raimondo though, I have to acknowledge that the breakdown is exactly what one would expect a priori. The Court's decision was written by Chief Justice Roberts, joined by the usual suspects. The dissent was written by Elena Kagan, joined by Sotomayor and Jackson.
What I'm calling for convenience the Loper Bright case is one of two cases that were combined for this appeal. The other is formally known as Relentless v. Commerce Department. Each arose as a challenge to a regulation by the National Marine Fisheries Service, thus warranting the illustration above. Technically speaking, the vote was 6 to 2 in Relentless, where Jackson recused herself on grounds of conflict. She voted in Loper Bright, so that split was 6 to 3.
The majority of six, through Roberts, maintains that Chevron deference is a violation of the Administrative Procedure Act (APA). That is an important feature of this ruling. It interprets a statute, so it is NOT dependent on a "non-delegation" theory of the Constitution.
The APA "makes clear" as Roberts reads it, "that agency interpretations of statutes -- like agency's interpretations of the Constitution -- are not entitled to deference." The Commerce Department, which includes the [deep state's] fisheries service, contended that it is better equipped to clarify ambiguities in the federal law affecting its area of scientific expertise than are the courts.
Roberts replied, "Congress expects courts to handle technical statutory questions" with the benefit as necessary of briefings, "friends of the court" and other resources. The courts should "consider" an agency's expertise as it impacts interpretation of a statute, but they need not defer to it. Again, note the word with its careful passing of the buck here to Congress. Thomas, in a concurring decision, indicates that he would put this on a constitutional basis, but that is not the ruling of the court.
In dissent, Kagan wrote that the court has just delivered a "jolt" to the legal system, and she is concerned about the size and consequences of this jolt. After all Chevron deference "has been applied in thousands of judicial decisions [and] has become part of the warp and woof of modern government, supporting regulatory efforts of all kinds ... keeping air and water clean, food and drugs safe, and financial markets honest."
And with THAT ominous note we may well conclude this wrap-up of the rather apocalyptic October 2023 session of the US Supreme Court.
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