Notice & Comment

Brand X is Right There in Chevron

The Supreme Court recently heard oral argument in Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce, and so the administrative law world is (especially) abuzz about the possible imminent demise of Chevron deference. Wrapped up in the conversation is the future of a related case, Brand X, in which the Supreme Court held that an agency is not bound to accept an Article III’s court’s prior interpretation of an ambiguous statutory provision that the agency is charged with administering.

Confession: I have always loved Brand X. Part of this is nostalgia. The case was decided the year before I graduated from law school, and it loomed large in my first year of practice in a telecom and appellate litigation practice. But more than that, I have always appreciated the raw logic of Brand X. Chevron says that statutory ambiguity is a congressional delegation of interpretative authority to the agency (and therefore not to the courts). If a statutory provision is ambiguous, the agency’s authority to select Permissible Interpretation B should not be affected by the happenstance that a federal court got there first and selected Permissible Interpretation A. There’s something very satisfying about the Court following this logic all the way through in Brand X. And I have always thought (and continue to think) that Brand X rises and falls with Chevron. It would be nonsensical for the Supreme Court to overrule Brand X without also overruling or substantially retheorizing Chevron.

What I noticed only very recently, however, is that the principle of Brand X literally is present in Chevron itself. In Chevron, a principal reason the D.C. Circuit offered for rejecting the EPA’s across-the-board use of the bubble concept in interpreting “stationary source” was that the DC Circuit had already rejected that approach in earlier cases. In her opinion, then-Judge Ruth Bader Ginsburg explained:

In ruling upon EPA’s regulatory change, we do not write on a clean slate. Our course is marked by two prior decisions in which panels of this court determined the applicability vel non of the bubble concept to distinct Clean Air Act programs. In Alabama Power Co. v. Costle, 636 F.2d 323 (D.C. Cir. 1979), the court held EPA must employ the concept in the Act’s Prevention of Significant Deterioration (“PSD”) regime, a scheme designed to maintain air quality in clean air areas; in ASARCO, Inc. v. EPA, 578 F.2d 319 (D.C. Cir. 1978), the court ruled out application of the concept to national new source performance standards (“NSPSs”) which the Act directs EPA to set with a view to enhancing air quality. In each case the court focused on the purpose Congress envisioned for the particular program at issue. ASARCO declared the bubble concept impermissible when the congressional objective was improvement, rather than simply preservation, of existing air quality. See 578 F.2d at 327-29; see also id. at 330 (Leventhal, J., concurring) (challenged regulations would contravene congressional policy contemplating that modification of a facility would bring about air quality improvement). Alabama Power held the concept “precisely suited” to the congressional design when the intent was “to preserve (existing) air quality,” rather than to improve it. 636 F.2d at 402.

Natural Resources Defense Council, Inc. v. Gorsuch, 685 F.2d 718, 720 (D.C. Cir. 1982).

At the start of his opinion for the Supreme Court, Justice Stevens likewise explained:

Based on two of its precedents concerning the applicability of the bubble concept to certain Clean Air Act programs, the court stated that the bubble concept was “mandatory” in programs designed merely to maintain existing air quality, but held that it was “inappropriate” in programs enacted to improve air quality. Since the purpose of the permit program—its “raison d’être,” in the court’s view—was to improve air quality, the court held that the bubble concept was inapplicable in these cases under its prior precedents. It therefore set aside the regulations embodying the bubble concept as contrary to law. We granted certiorari to review that judgment, and we now reverse.

The basic legal error of the Court of Appeals was to adopt a static judicial definition of the term “stationary source” when it had decided that Congress itself had not commanded that definition. Respondents do not defend the legal reasoning of the Court of Appeals. Nevertheless, since this Court reviews judgments, not opinions, we must determine whether the Court of Appeals’ legal error resulted in an erroneous judgment on the validity of the regulations.

467 U.S. 837, 841-42 (1984) (emphasis mine). In other words, the D.C. Circuit erred by relying on its earlier interpretation of an ambiguous statutory provision to invalidate the agency’s selection of an alternative, permissible interpretation. This of course was precisely the Ninth Circuit’s error in Brand X.

There’s language later in the Supreme Court’s opinion, too, suggesting that EPA’s 1980 interpretation (which it had changed its mind about in the rule the Supreme Court was reviewing in 1984) wasn’t really the agency’s own policy choice but rather conformity to the judicial interpretation:

In August 1980, however, the EPA adopted a regulation that, in essence, applied the basic reasoning of the Court of Appeals in these cases. The EPA took particular note of the two then-recent Court of Appeals decisions, which had created the bright-line rule that the “bubble concept” should be employed in a program designed to maintain air quality but not in one designed to enhance air quality. Relying heavily on those cases, EPA adopted a dual definition of “source” for nonattainment areas that required a permit whenever a change in either the entire plant, or one of its components, would result in a significant increase in emissions even if the increase was completely offset by reductions elsewhere in the plant. The EPA expressed the opinion that this interpretation was “more consistent with congressional intent” than the plantwide definition because it “would bring in more sources or modifications for review,” 45 Fed. Reg. 52697 (1980), but its primary legal analysis was predicated on the two Court of Appeals decisions.

Id. at 857.

It’s enough to make you wonder why Brand X–a blockbuster case at the time!–was necessary. After all, it only reiterated a principle clearly established two decades earlier in Chevron.

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