Administrative Law

Justice Gorsuch Side-Swipes Chevron

In a dissenting opinion, Justice Gorsuch suggests it's a good thing when parties don't rely upon the Chevron doctrine.

|The Volokh Conspiracy |

This morning, the Supreme Court released decisions in three cases. Among the three was BNSF Railway Co. v. Loos, a dispute over whether a railroad's payment to an employee for work-time lost due to an on-the-job injury should be treated as taxable compensation. Justice Ginsburg wrote the opinion for the court, endorsing the railroad's view that such a payment is taxable compensation. Justice Gorsuch, joined by Justice Thomas, dissented.

In addition to challenging the majority's interpretation of the relevant statutes, Justice Gorsuch took the opportunity to renew his criticism of the Chevron doctrine, while noting his relief that no justice saw the need to defer to the opinion of the Internal Revenue Service as to how to resolve this case. After explaining why he rejected BNSF Railway's position based upon the relevant statute's text and history, Gorsuch finished off his opinion with the following:

By this point BNSF is left with only one argument, which it treats as no more than a last resort: Chevron deference. In the past, the briefs and oral argument in this case likely would have centered on whether we should defer to the IRS's administrative interpretation of the RRTA. After all, the IRS (at least today) agrees with BNSF's interpretation that "compensation . . . for services rendered" includes damages for personal injuries. And the Chevron doctrine, if it retains any force, would seem to allow BNSF to parlay any statutory ambiguity into a colorable argument for judicial deference to the IRS's view, regardless of the Court's best independent understanding of the law. See Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984). Of course, any Chevron analysis here would be complicated by the government's change of heart. For if [Social Security Board v.] Nierotko is as relevant as BNSF contends, then it must also be relevant that, back when Nierotko was decided, the IRS took the view that the term "wages" in the Social Security Act did not include backpay awards for wrongful termination. See 327 U. S., at 366–367. And if "wages" don't include backpay awards for wrongful terminations, it's hard to see how "compensation . . . for services rendered" might include damages for an act of negligence. Still, even with the complications that follow from executive agencies' penchant for changing their views about the law's meaning almost as often as they change administrations, a plea for deference surely would have enjoyed pride of place in BNSF's submission not long ago.

But nothing like that happened here. BNSF devoted scarcely any of its briefing to Chevron. At oral argument, BNSF's lawyer didn't even mention the case until the final seconds—and even then "hate[d] to cite" it. Tr. of Oral Arg. 58. No doubt, BNSF proceeded this way well aware of the mounting criticism of Chevron deference. See, e.g., Pereira v. Sessions, 585 U. S. ___, ___–___ (2018) (Kennedy, J., concurring). And no doubt, too, this is all to the good. Instead of throwing up our hands and letting an interested party—the federal government's executive branch, no less—dictate an inferior interpretation of the law that may be more the product of politics than a scrupulous reading of the statute, the Court today buckles down to its job of saying what the law is in light of its text, its context, and our precedent. Though I may disagree with the result the Court reaches, my colleagues rightly afford the parties before us an independent judicial interpretation of the law. They deserve no less.

Given the Supreme Court's treatment of Chevron last term, this opinion is notable, for Justice Gorsuch is suggesting that advocates may wish to de-emphasize Chevron-based arguments. At the same time, the Court has seemed less interested in relying upon Chevron to decide cases. This poses the possibility that the Court may not get around to overturning or narrowing Chevron. Instead, it could simply stop relying upon it, and hope that agencies get the message.

Two other quick points. First, many groups predicted that Justice Gorsuch would be a predictable "pro-business" vote on the Supreme Court, this is the second time in the past two months that Justice Gorsuch has authored an opinion opposite the position urged by business groups (and, in both cases, he sided with transportation workers). Why ,it is almost as if his decisions are dictated by his view of the law, and not whether business interests "win" or "lose"—which is how it should be.

Second, BNSF Railway was one of two majority opinions by Justice Ginsburg released today. (The other was in Fourth Estate Public Benefit Group v. Wall-Street.com.) Whatever one thinks of the opinions, they should quell any fears about Justice Ginsburg's health or vitality, as the Notorious RBG was apparently quite productive while recovering from her recent medical procedures.

NEXT: Where angels fear to tread

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  1. “Whatever one thinks of the opinions, they should quell any fears about Justice Ginsburg’s health or vitality, as the Notorious RBG was apprrently quite productive while recovering from her recent medical procedures.”

    It is impossible to deduce anything from Justice Ginsburg having authored two majority opinions other than, well, the fact that she authored two majority opinions. With the same information, one could just as easily proclaim that the Chief knows how serious her condition was/is, and wants to allay the (left-leaning) public’s fears, so he frontloaded her authorship. Similarly, he could know that she is close to the end of her time on the bench and is giving her an opportunity to “go out with a bang” and author a bunch of opinions before she resigns.

    There are a million possible explanations, and they are all as grounded in reality (or not) as the one you offered.

    1. I think the only thing we can reasonably deduce is that her law clerks are in excellent health.

      1. She’s been at oral arguments. A bunch of people claim to have seen her. The conspiracy deepens!

        1. Thomas has been at oral arguments. Apparently he sleeps through them sometimes. They’re not that strenuous and, frankly, what is anyone going to do if you zone out the whole time?

          Not that I have a side here. She’s probably hale and hearty. Frankly, I would be surprised if their clerks didn’t do all the heavy lifting when writing opinions with just direction and guidance from the Judges themselves – *all* the SC judges’ clerks.

      2. “I think the only thing we can reasonably deduce is that her law clerks are in excellent health.”

        This is absolutely correct. Though probably apocryphal, I’ve heard that toward the end of his life, and with a Republican in office to appoint his successor, Marshall supposedly joked with his clerks that if he died, they should just prop him up in his seat and keep him voting.

        1. The Supreme Court just ruled that can’t happen last week.

          1. It’s like you’ve never seen Weekend at Bernie’s.

  2. Justice Ginsburg was the obvious choice, since this was a validation of BNSF demanding to pay higher taxes. Nirvana for liberals.

  3. “Justice Gorsuch Side-Swipes Chevron”

    Yeah, but we don’t need to call the cops. We’ll just distinguish or ignore it, it’s not really that much damage.

  4. We have a motion (Justice Gorsuch) and a second (Justice Thomas). Can we proceed with substantive debate now?

    1. That’s what these dissents and concurrences do – send signals to the legal profession that there are people on the Supreme Court willing to entertain certain arguments and basically inviting cases raising such arguments.

  5. “…a colorable argument for judicial deference to the IRS’s view, regardless of the Court’s best independent understanding of the law.”

    Not an expert on Chevron, but why is this as bad as Justice Gorsuch seems to be suggesting? The court still has to decide whether or not the administrative view is a reasonable interpretation of the law. And the administrative agency is the body on whom Congress delegated the authority to enforce the law. Isn’t it reasonable and constitutional to defer to their judgment, as long as it is a reasonable interpretation of the Congressional law?

    1. Because Chevron allows the regulting body to indirectly write the law.
      They are not a neutral body, but have their own agendas. For example, in this case, the IRS certainly thinks it has the rights to collect taxes on a payment that is not specifically covered as income,

    2. Because they’re not making an interpretation (reasonable or otherwise) of Congressional law. The idea behind Chevron deference starts from the delegation by Congress to the agency to write the regulation in the first place. They do have to follow a notice-and-comment process and Congress can theoretically override the regulation but there is no special permission or affirmative approval by Congress of the actual regulation the agency wrote.

      Having written the regulation, they now get to enforce it. So far, so good. Where it goes bad is that Chevron deference says that they agency gets to “interpret” it’s own regulation and that courts must defer to the agency’s interpretation. In other words, if the agency wrote an ambiguous regulation that could mean X or Y and the agency shows up in court today and says interpretation Y, then Y wins even if the same agency said X just yesterday. The agency is effectively rewarded for writing an ambiguous regulation by being given unlimited power to twist that ambiguity to whatever ends they choose for the day.

      1. Thanks to you both for your responses.

        “Because Chevron allows the regulating body to indirectly write the law.”

        I think maybe it was Congress who has allowed this, by passing a generally worded law, which will require some interpretation. And wouldn’t overturning Chevron allow the judiciary to indirectly write the law. Perhaps they already do, I hear some of you saying.

        “…The idea behind Chevron deference starts from the delegation by Congress to the agency to write the regulation in the first place.”

        But surely the agency isn’t dreaming up regulations out of thin air, they are at least ostensibly based on things passed by Congress. And even under Chevron, can’t the courts still insure that is the case? If they are making a regulation with no relation to a law, surely the judiciary can strike it down as unreasonable, even under Chevron.

      2. Rossami, you seem to be describing Auer deference, where an agency interprets its own regulation. Chevron refers to an agency construing a statute that it administers, not a regulation. Some observers believe that Auer is more deferential, as it upholds the agency’s view as long as it is not “plainly erroneous or inconsistent” while Chevron allows the agency’s view if it is a “permissible construction” of the statute, although Justice Scalia was of the opinion that in practice they amounted to the same thing and Auer was just Chevron for regulations.

  6. Its a sad country where payment to compensate for an injury are held by the taxman as ‘profits’ to be taxed.

    1. Read again, the amounts at issue here weren’t damages to compensate for injury. They were basically a salary for time that would have been worked but for the injury.

      1. Yeah, but Gorsuch is right. It was an estimate of harm, not pay for work done.

  7. “Why ,it is almost as if his decisions are dictated by his view of the law, and not whether business interests “win” or “lose”?which is how it should be.”

    That’s certainly one conclusion. Another is that he saw an opportunity to “side-swipe Chevron”.

    “Whatever one thinks of the opinions, they should quell any fears about Justice Ginsburg’s health or vitality, as the Notorious RBG was apparently quite productive while recovering from her recent medical procedures.”

    That’s not how conspiracy theories work. The more evidence against a conspiracy, or the complete lack of evidence in favor, only strengthens the conspiracy.

  8. “…as the Notorious RBG was apparently quite productive…”

    Or at least her clerks were

  9. And BNSF took the view that, because Mr. Loos owed the IRS taxes on the lost wages portion of his judgment, it had to withhold an appropriate sum and redirect it to the government. The company took this position even though it meant BNSF would owe corresponding excise taxes. See 26 U. S. C. ?3221. It took this position, too, even though no one has identified for us a single case where the IRS has sought to collect RRTA taxes on a FELA judgment in the 80 years the two statutes have coexisted. The company even persisted in its view after, first, the district court and, then, the Eighth Circuit ruled that Mr. Loos’s award wasn’t subject to RRTA taxes. Even after all that, BNSF went to the trouble of seeking review in this Court to win the right to pay the IRS. What’s the reason for BNSF’s tireless campaign? Is the dissenting company really moved by a selfless desire to protect afederal program from “a long-term risk of insolvency”? See ante, at 5, n. 2. Several amici offer a more prosaicpossibility. Under the rule BNSF seeks and wins today,RRTA taxes will be due on (but only on) the portion of a FELA settlement or judgment designated as lost wages. Taxes will not attach to other amounts attributed to, say,pain and suffering or medical costs.

    1. (contd) At trial, of course, a plaintiff ‘s damages are what they are, and often jurieswill attribute a significant portion of damages to lost wages. But with the help of the asymmetric tax treatmentthey secure today, railroads like BSNF can now sweeten their settlement offers while offering less money. Forgotrial and accept a lower settlement, they will tell injured workers, and in return we will designate a small fraction(maybe even none) of the payments as taxable lost wages.In this way, the Court’s decision today may do preciselynothing to increase the government’s tax collections or protect the solvency of any federal program. Instead, it may only mean that employees will pay a tax for going to trial?and railroads will succeed in buying cheaper settlements in the future at the bargain basement price ofa few thousand dollars in excise taxes in one case today.

      Thanks Trump for getting Gorsuch on the SCOTUS.

      Undermine Chevron as much as possible.

  10. I’m surprised that neither the author nor any commentor seems to be aware of Kisor v. Wilkie, to be argued at the court on March 27. The Chevron doctrine has a sister, the Auer doctrine, where agency interpretation of an ambiguous regulation overrules all substantive canons of construction. There is a good chance Auer will fall, in which case Chevron would almost certainly follow.

    1. There was a good discussion on Auer a week ago:

      https://reason.com/volokh/2019/02/26/
      justice-department-asks-court-to-narrow

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