Michigan v. EPA: How Has it Been Interpreted?

January 7, 2016

On June 29, 2015, the Supreme Court decided Michigan v. EPA. Initially overshadowed by its term companions King v. Burwell, and Obergefell v. Hodges, Michigan has quickly garnered the attention of administrative law practitioners around the country. Authored by Justice Scalia, Michigan re-examines the boundaries of “Chevron deference”[1]—the formal mandate from the Supreme Court “to accept an agency’s reasonable resolution of an ambiguity in a statute that the agency administers.”[2] Premised on the “presumption that Congress…desired the agency (rather than the courts) to possess whatever degree of discretion” in interpreting a statute,[3] critics have opined that reevaluation of Chevron deference was long overdue. Once satirically described as license for an administrative agency to “take just about any action it wants as long as it doesn’t run smack into statutory language,”[4] Michigan may have dealt a severe blow to Chevron and an administrative agency’s ability to interpret statutes. The following is a brief summary of Michigan and the two cases in the circuit courts of appeal that have interpreted it. Michigan’s legacy is still unclear.

 

Michigan v. EPA[5]

In Michigan, the plaintiff challenged the EPA’s interpretation of 42 USCS § 7412, which allows the EPA to regulate fossil-fuel-fired power plants if it determines regulation is “appropriate and necessary.”[6] Specifically, the plaintiff complained that the EPA was required to “consider[] costs” when deciding whether power plants should be regulated.[7] Although the statue was silent on whether the EPA was required to consider costs, under Chevron, courts typically affirmed a state agency’s reasonable interpretation of a statute.[8] In Michigan, however, the Supreme Court made it clear that it felt the EPA “strayed far beyond [the] bounds” of reason.[9] Although the Court did not create a new standard of review for agency interpretations, Michigan struck a severe blow to the practice of rubber-stamping agency interpretations under Chevron. Two appellate courts have interpreted Michigan since its publication.

 

NRDC v. United States EPA[10]

In NRDC v. United States EPA, “four environmental groups” opposed the issuance of a “Vessel General Permit…to regulate the discharge of ballast water from ships”[11] because of its potentially harmful ecological consequences.[12] The Second Circuit remanded the issue to the EPA because it found its decision-making process “arbitrary and capricious.”[13] Specifically, the Second Circuit reprimanded the reporting requirements the EPA put in place,[14] its disregard of best available technologies,[15] and its indifference to alternative treatment solutions.[16] This harsh critique of the EPA in its discretionary capacity signals a significant shift in Chevron deference. While the court acknowledged the EPA’s superior ability to resolve “factual questions involving scientific matters in its area of technical expertise”—it took part in an ad hoc inquiry of the EPA’s reasonableness.[17] Long gone are the days of unquestioned administrative agency discretion.

 

Bible v. United Student Aid Funds, Inc.[18]

In Bible v. United Student Aid Funds, Inc., the recipient of a student loan sued the company that guaranteed her loan after she felt it imposed “unreasonable” collection costs on her when she went into default.[19] Bible claimed that the collection costs the guaranty company imposed on her violated the Secretary of Education’s interpretation of loan regulations, which was binding.[20] The Seventh Circuit reversed the District Court’s dismissal, and affirmed the Secretary of Education’s interpretation of federal loan regulations: “Even if we thought the interpretation urged by USA Funds were better in the abstract, ‘a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency.’”[21] The Seventh Circuit’s initial reference to Chevron suggests its comfort with deferring to administrative agency interpretations of ambiguous statutes. Moreover, the Seventh Circuit’s placement of a burden on the party opposing an administrative agency’s interpretation of a statute to prove why an interpretation is “unworthy of deference” favors administrative agencies.[22]

 

Conclusion

Michigan’s place among our country’s administrative law jurisprudence is still unclear. Although the Second Circuit has used Michigan to reprimand the EPA’s discretion in setting ballast water permit standards, the Seventh Circuit has used it to affirm the Secretary of Education’s interpretation of student loan statutes. Chevron deference has definitely been undercut—to what extent is not yet certain.

 

[1] Chevron, U.S.A., Inc. v. NRDC, Inc., 467 U.S. 837, 844 (1984).

[2] Michigan v. EPA, 135 S.Ct. 2699, 2707 (2015).

[3] Michigan, 135 S.Ct. at 2707 (Justice Thomas, concurring) (quotation omitted).

[4] Philip A. Wallach, Michigan v. EPA: Competing conceptions of deference due to administrative agencies, Brookings, June 29, 2015, http://www.brookings.edu/blogs/fixgov/posts/2015/06/29-michigan-v-epa-administrative-deference-wallach.

[5] Michigan, 135 S.Ct. at 2699.

[6] Id. at 2705.

[7] Id.

[8] Id. at 2707.

[9] Id.

[10] NRDC v. United States EPA, 2015 U.S. App. LEXIS 17477 (2d Cir. Oct. 5, 2015).

[11] Id. at *5.

[12] Id. (“When a ship takes on ballast water, it can inadvertently pick up organisms and their eggs and larvae, as well as sediment and pollutants. When the ship discharges ballast water, often in a new place, these organisms and pollutants are ejected into the surrounding waterbody, enabling these organisms to establish new, non-native populations. As a result, ships have become one of the primary ways that invasive species are spread from one waterbody to another.”).

[13] Id. at *61.

[14] Id. at *58 (“There is no requirement to report actual volumes, locations, or composition of ballast water discharges.”).

[15] Id. at *24 (“EPA acted arbitrarily and capriciously when it chose the IMO Standard without adequately explaining why standards higher than the IMO Standard should not be used given available technology.”).

[16] Id. at *29 (“We conclude that by failing to consider onshore ballast water systems, EPA acted arbitrarily and capriciously.”).

[17] Id. at *21-22.

[18] Bible v. United Student Aid Funds, Inc., 799 F.3d 633 (7th Cir. 2015).

[19] Id. at 638.

[20] Id.

[21] Id. at 650 (citing Chevron, U.S.A., Inc., 467 U.S. at 844).

[22] Id. at 650-651.

Emilio Longoria was born and raised in Houston, Texas. He received his diploma from Strake Jesuit High School in 2009 and his Bachelor's Degree in History from Rice University in 2013. Emilio's interest in the Energy industry began in college, where he worked for the James A. Baker Institute researching cap and trade policy and Mexican energy reform. Before matriculating at the University of Texas School of Law, Emilio worked as a legislative aid to Representative Eddie Lucio III, D., Brownsville. Emilio is currently involved in various student groups at UT Law, including the Journal of Oil, Gas, and Energy Law, the Chicano and Hispanic Law Students Association, and the UT Law Society Program. After law school, he plans to develop a practice in Houston and is interested in commercial litigation.