The Texas Chevron Deference Preference

What better timing to start a newsletter about regulatory and administrative law than the exact same day that the U.S. Supreme Court accepts review of the absolute O.G. of all administrative law doctrines?

Such coincidental timing. Almost makes you think I might be in cahoots with SCOTUS. Someone should start that rumor for sure.

I’m of course referring to last week’s cert grant in Looper Bright Enterprises v. Raimondo. The issue presented in Looper (I’m not sure what the shorthand moniker will be yet, but I’m pulling for Looper) is whether SCOTUS should overrule Chevron v. Natural Resources Defense Council. It’s the billion dollar question in administrative law. Forty years of precedent are on the line.

[Pictured above: an executive branch employee in a country without strong separation of powers.]

The basic idea of Chevron deference is that, in certain cases, courts will defer to an agency’s interpretation of the very provision of law that the agency itself is enforcing.

But you don’t need to hear another analysis from me. Smarter people have and will continue to write about this. I’d recommend A Welcome Supreme Court Review of Chevron Deference and How Businesses Will React if Supreme Court Overrules Chevron to get started. Of course, plenty of other great analyses are out there and will continue to come.

And you could argue that Chevron has been watered down in recent decades (see, e.g., Michigan v. EPA). But no doubt it is a major development.

But that’s all federal law. What about Texas law? How do we Texans feel about Chevron besides not laying claim to its HQ :(.

I’ll get to that, BUT FIRST, let’s establish some basic language so that we’re all speaking the same language going forward. I should have done this in the first issue.

I keep saying this is a regulatory, administrative, and legislative law newsletter. What is the difference between all these?

Regulatory — the WHAT. Regulations are the substance. The actual meat of how a business or person or thing is told to behave. Regulations are also sometimes referred to as “secondary law.” They don’t come directly from a legislative body, but from an executive branch by way of a legislative delegation to the executive branch.

Administrative — the HOW. Administrative law is the process. It’s how the substantive product is made, how the legislative delegation took place and resulted in a regulation. As the great Texas Administrative Lawyer and Baylor Law Professor Ron Beal has said, administrative law is a "hybrid system" that borrows principles from the constitutional system and blends them with informal processes of decision-making and policy formation.

Legislative — the WHY. Well, maybe not really the why, but I had to keep that theme going. Legislative law is everything to do with how “primary law” is made. All the rules and processes and powers of a legislative body. I would also include here anything under the purview of the Texas Ethics Commission: campaign/officeholder ethics, lobby registration and ethics, campaign finance law, etc. Because if you are doing legislative law, you also need to know those things.

Alright, now to the meat of this issue: how does Texas feel about Chevron deference?

Well, to start, Texas is HUGE. We’re the eighth largest economy in the world. We’re pushing 30 million people. We’re home to many major global companies—but not Chevron. Some of our state agencies are the largest of their kind in the world outside of the federal equivalent (looking at you Texas Commission on Environmental Quality).

Not only this, but Texas’s regulatory reputation precedes itself. We’re known as a free market and low regulatory burden state. So when it comes to Chevron—a legal doctrine that in one sense gives the executive branch a degree of unchecked power—what do we think about that?

I could go into some great detail and history here, but instead I will commend to you former Texas Solicitor General Scott Keller’s classic article Texas Versus Chevron. Keller concludes that even though Texas has never formally adopted the Chevron standard, its approach and line of cases are likely influential for litigants.

Go read the whole thing.

Finished? Great. Now forget it (almost).

Some Texas lawmakers would like to stop Chevron in Texas before it starts.

Most of you know that the Texas Legislature is currently winding its way through the regular session. (It’s going just swimmingly.) One bill in particular would prohibit any form of state law agency deference.

HB 1947 by Rep. Brian Harrison (R—Waxahachie) is currently pending before the House Calendars Committee (the last step before it reaches the floor for debate). Were it to pass, the bill would amend the Texas Government Code to require courts and administrative law judges to review—de novo—the meaning of state law rule without deference to an agency’s interpretation.

Not only that, but should the reviewing court or administrative law judge find ambiguity, it would be required to resolve that ambiguity in favor of “limiting state agency authority.”

The idea is not a new concept. The buck against Chevron has be percolating for quite some time. Eleven states have already adopted similar laws either through judicial opinion or otherwise: Ohio, Florida, Arizona, Kansas, Wyoming, Utah, Michigan, Delaware, Wisconsin, Mississippi, and Tennessee.

Practically, what is the effect of this measure? For litigants, it is a new standard of review that must be considered. A non-government litigant could likely have more lines of attack and the agency will likely have a little less footing on which to justify its actions.

The real kicker of this bill is the requirement to resolve any ambiguity in favor of “limiting state agency authority.” That phrase in itself will require some interpretation. For one, what does it mean to limit state agency authority? That direction seems fairly broad. Could it result in a court involving itself too much with the affairs of an executive agency?

Who knows. But if the bill passes, I promise to do a much better analysis of its effects and potential hazards. And the bill does still have to pass. With three weeks left in the regular session, it has yet to be placed on the House calendar, much less move through the Senate process.

But getting a bill out of committee—even on a 5-4 vote—says quite a lot about its chances. It sometimes takes a few sessions to get a measure passed. If this doesn’t pass this session, I imagine we’ll see it again.

And while I certainly understand the premise for the bill, I am not convinced that Texas needs something like this. For one, Texas has not adopted the Chevron standard and has instead developed its own analysis for agency deference. Plus, courts are not always super deferential to state agencies (e.g., the Third Court of Appeals’s recent decision overruling the Public Utility Commission’s emergency pricing orders). And lastly, Texas does not suffer from the same bloated administrative state problems as the federal government. We run a pretty tight ship.

But, this is an interesting policy issue to watch. At the very least, all this Chevron talk will give Regulated Discourse some great fodder for years to come.

Thank you for reading. I’d love to hear your thoughts!