The justices will wrap up their January argument sitting with a bang: an important property rights case and two cases asking the Court to overturn the controversial administrative law doctrine known as (read this with a spooky voice) Chevron deference.
The first argument of the week is Macquarie Infrastructure Corp. v. Moab Partners, LP. This is a securities fraud case involving a company’s failure to make certain disclosures to investors. If you’re into this sort of thing (I confess, I’m not!), check out these overviews by Bloomberg Law and Troutman Pepper. I also anticipate Court Briefs, a new podcast by Paul Weiss on the Supreme Court’s business docket, may provide commentary.
Now let’s get to the good stuff.
In the second argument of the day, DeVillier v. Texas, the Court will consider whether the Fifth Amendment’s Takings Clause provides a judicially enforceable right to just compensation in the absence of a statute creating a cause of action.
The case stems from a highway project outside of Houston, Texas that caused significant flooding on private property. As part of the project, the state’s department of transportation built a three-foot barrier along Highway 10, which runs parallel to the Gulf of Mexico. During heavy storms, such as Tropical Storm Harvey in 2017 and Tropical Storm Imelda in 2019, the barrier kept the highway dry (which was good!) by preventing water from draining south toward the Gulf (which turned out to be . . . very bad). The storm water was trapped on the north side of the highway, turning Richard DeVillier’s cattle ranch into a lake for days. (Check out this animation of the flooding.)
DeVillier and his neighbors complained to the state to no avail. Then they filed actions for inverse condemnation in state court. For those unfamiliar with inverse condemnation, it’s an action a property owner may bring seeking just compensation for a taking when the government has not held formal condemnation proceedings. (My PLF colleague Robert Thomas maintains a blog dedicated to all-things-inverse-condemnation).
Texas sought to remove the cases to federal court, where it argued that the challengers could not bring an action directly under the Takings Clause nor could they sue the state under 42 U.S.C. § 1983, a federal law authorizing suits for deprivation of civil rights against state and local officials. In other words (as I often tell my kids), “Tough tacos.” A federal magistrate judge heard the consolidated cases and recommended that the district court deny the state’s motion to dismiss the consolidated complaint. The district court did just that.
On appeal to the U.S. Court of Appeals for the Fifth Circuit, the panel held in a three-sentence opinion that the Takings Clause as applied to the states via the Fourteenth Amendment did not create a cause of action for the challengers’ claims against Texas. The Fifth Circuit denied the challengers’ request for a rehearing by the full court over the dissent of five judges. Next stop: SCOTUS.
The question the justices have been asked to decide is whether claims for just compensation must be legislatively authorized or if they may be brought pursuant to the Takings Clause without any further legislative action. DeVillier and his fellow challengers – represented by our friends at the Institute for Justice – argue that the Takings Clause is a self-executing provision of the Constitution that creates a judicially-enforceable right to just compensation. In their view, a separate statute creating a cause of action is not necessary.
Indeed, they contend the Supreme Court already held in First English Evangelical Lutheran Church v. County of Los Angeles (1987) “statutory recognition was not necessary” to authorize actions for just compensation because “they are grounded in the Constitution itself.” If that’s not enough, the challengers point out that the right to just compensation “dates at least to the adoption of Magna Carta in 1215” and it “grew only stronger from there” – citing James Madison’s writings that explain why federal courts would need to enforce constitutional guarantees including the Takings Clause.
Texas maintains that the Constitution assigns Congress (not the courts) the job of creating causes of action to seek monetary compensation. The state claims that “[n]o one disagrees” that the Takings Clause is self-executing, but that the challengers “conflate the substance of the just-compensation right . . . with the procedural mechanisms used to vindicate those rights.” Legislatures may select the method, such as “state causes of action, specialized tribunals, or private bills,” for paying just compensation.
Texas concludes that DeVillier & Co. should litigate their claims using available state causes of action instead of seeking relief through the federal courts (which seems a bit rich considering it was the state that took these cases from state court to federal court!).
There are several fantastic amici. Don't miss Anastasia’s for Cato or my PLF colleagues' brief pointing out that governments love playing these sorts of games to avoid paying for property they have taken.
The Court will hear back to back arguments in two cases presenting the same question: whether the Court should overrule Chevron v. National Resources Defense Council. It’s the big kahuna of administrative law doctrines; the dragon many foes of the ever-expanding administrative state have sought to slay.
Why two cases, you ask? Justice Ketanji Brown Jackson has recused herself from Loper Bright Enterprises v. Raimondo, which came before the D.C. Circuit when she served on that court. Relentness, Inc. v. Department of Commerce challenges the same regulatory action and presents the same question but comes from the First Circuit. Thus, all nine justices may participate in Relentless, and the Court may ultimately issue one opinion for both cases (as was the case with last term's Students for Fair Admissions v. Harvard and Students for Fair Admissions v. University of North Carolina). With that background out of the way, let’s dig in.
In 1984, the Court decided the Chevron case, which set up a framework for courts to assess agency interpretations of laws they are charged with administering. I bet you won’t be surprised to hear that Congress is not always precise when it crafts statutory language, leaving gaps for the agency to fill. Naturally, this sometimes leads agencies to interpret the language to increase their power.
Chevron has two steps (a real boot scootin' boogie if you ask me) for courts to consider. First, has Congress directly addressed the issue at hand? If so, and the statute is clear, that’s the end of the matter and there’s no need to defer to an agency's interpretation. But, at the second step, if the language is ambiguous or doesn’t address the particular issue at hand, a court will consider if the agency’s interpretation is reasonable. It doesn’t have to be the best interpretation, just a reasonable one. If it is, then the court will defer to the agency. Sounds simple enough, but in recent years, several justices have expressed skepticism about the doctrine's constitutional foundation. Isn’t it a judge’s job, after all, to “say what the law is,” as Chief Justice John Marshall declared in Marbury v. Madison?
That brings us to the cases at hand. Loper Bright and Relentless are companies that fish Atlantic herring in New England. With the help of Cause of Action Institute and New Civil Liberties Alliance, the companies are challenging a rule the National Marine Fisheries Service (the Service) put in place that would require companies to pay the salary of a federal observer riding on their boats to ensure they comply with federal law.
The Magnuson-Stevens Fishery Conservation and Management Act governs fishery management in federal waters, and it created eight regional fishery councils, including the New England Council. The law authorizes the Service to require vessels to carry federal observers onboard to ensure compliance with its regulations aimed at preventing overfishing, rebuilding overfished stocks, and generally promoting long-term health and stability of the fishery.
Recognizing that space on fishing boats is limited, Congress authorized only three circumstances where the vessels could be required to pay an observer’s salary (one for the North Pacific Council covering Alaska, Washington and Oregon; one for programs where someone is permitted to harvest a specific quantity of total allowable catch; and one for foreign vessels fishing within the U.S. economic zone).
The New England Council proposed requiring fishing vessels to pay for observers if federal funding was not available, and the Service adopted this as a final rule in 2020. Loper Bright and Relentless challenged the rule, pointing out it would cost them roughly 20 percent of their annual profits. They argue that federal law did not authorize the Service to mandate industry-funded monitoring, except for the three circumstances mentioned above. Both lost in the lower courts, which held that Congress delegated authority to the Service (by way of the Secretary of Commerce), and the Service was entitled to deference concerning its interpretation of the fishery management law.
At the Supreme Court, Loper Bright and Relentless argue that it’s time to place Chevron deference in the ash heap of history. As a precedent of the Court, it is entitled to “little, if any, stare decisis.” It was “egregiously wrong,” is “at odds with the basic division of labor in the . . . Constitution,” and has had disastrous real-world consequences. The government maintains that it would upset the apple cart if the Court overturned Chevron because Congress has legislated with it in mind for decades. Further, Chevron allows agencies to “bring to bear” their “unique” technical or scientific expertise in resolving the most pressing policy issues.
In recent years, Chevron has fallen out of fashion at the Supreme Court. The justices have not invoked it to resolve an agency case in several years. Yet it remains alive and well in the lower courts, as my Pacific Legal Foundation colleagues Will Yeatman and Adi Dynar explained in an article and an amicus brief. (Indeed, Will & Adi make the case that the government has made the situation worse by pressing for deference in lower courts and pivoting, claiming it doesn't need deference to win once a case reaches the Supreme Court). There was an avalanche of amicus briefs in support of both sides (including, of course, ones by Cato and the Pacific Legal Foundation).
Want more Chevron content? You can hear me discuss the possible end of Chevron on the Tech Policy podcast. And for a deep dive into the history and related doctrines that built upon Chevron, check out the Dissed episode “Lady Justice Isn’t Blind” featuring UVA law professor Aditya Bamzai and former acting Solicitor General Jeffrey Wall.
That's all for now! I’ll be back next week with a recap of the oral arguments.