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US Supreme Court Overturns Chevron Deference

In Loper Bright Enterprises v. Raimondo, the US Supreme Court expressly overruled the doctrine of deferring to an agency’s interpretation of allegedly ambiguous statutory language initially articulated in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc.

Under the Chevron doctrine, courts applied a two-step framework interpreting statutes administered by federal agencies. The first step asks whether Congress had “directly spoken to the precise question at issue.” Chevron, 467 U.S. at 842. If the statute is clear as to the interpretive question at issue, courts are bound by and must apply the clear meaning of the statute. If, however, the statute is ambiguous or silent, then courts proceed to the second step where they defer to the agency’s interpretation provided it is “based on a permissible construction of the statute.” Id. at 843.

This doctrine of deference, Loper Bright held, is at odds with the imperative that the Administrative Procedure Act (APA) gives to reviewing courts to “decide all relevant questions of law” and “interpret . . . statutory provisions.” 5 U.S.C. § 706 (emphasis added). Because Chevron required reviewing courts to give “binding deference to agency interpretations” instead of exercising their “independent judgment” as to the best reading of the statute, that doctrine “defies the command of the APA” by ceding the authority to decide some questions of statutory interpretation – those involving ambiguous statutes – to agencies. See Slip Op. 21; see also Slip Op. 14 (observing that § 706 “prescribes no deferential standard” for courts to apply when interpreting ambiguous statutes).

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TTB Updates to the Semi-Annual Regulatory Agenda

Last week in its regular newsletter, Alcohol and Tobacco Tax and Trade Bureau (TTB) announced updates to the Fall edition of the semi-annual Unified Agenda of Federal Regulatory and Deregulatory Actions (Regulatory Agenda). Like other federal agencies, TTB uses the Regulatory Agenda to report on its current rulemaking projects.

In the updated agenda, a few new items have been added, and many expected publication dates of Notices of Proposed Rulemaking (NPRMs), Advanced Notices of Proposed Rulemaking (ANPRMs) and Final Rules have changed. As always, readers should recognize that TTB rulemaking moves very slowly, and the Agency often does not meet the aspirational dates published in the Regulatory Agenda. (more…)




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FDA’s Delay of the Menu Labeling Rule Challenged

Two consumer advocacy groups recently sued the Food and Drug Administration (FDA) for delaying the compliance deadline for the agency’s 2014 menu labeling rule for a fourth time. The menu labeling rule requires menu items offered for sale in restaurants with 20 or more locations to disclose nutritional information and the number of calories in each standard menu item. FDA and Congress previously extended or delayed compliance with the menu labeling rule three times in 2015 and 2016. Before the latest delay, the most recent “compliance date” for the menu labeling rule was May 5, 2017.

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Supreme Court to Decide Important Administrative Law Issue

On December 1, 2014, the United States Supreme Court will hear oral argument in a case that will have significant implications for federal regulatory agencies like the U.S. Food and Drug Administration (FDA) and the Alcohol and Tobacco Tax and Trade Bureau (TTB).

The case is Mortgage Bankers Ass’n v. Harris, 720 F.3d 966 (D.C. Cir. 2013).  In that decision, the United States Court of Appeals for the D.C. Circuit refined a line of cases involving the Administrative Procedures Act (APA).  The APA governs the activities of federal agencies and, among other things, generally requires notice-and-comment rulemaking procedures, including publication in the Federal Register and a period of time for industry and the public to comment on proposed regulations, in order for a federal agency to adopt a new “rule.”  These procedural requirements aim to ensure transparency in governmental operations and a public “vetting” process before an agency adopts new regulatory requirements.

Beginning in the 1990s, the D.C. Circuit – which hears a large percentage of the cases involving challenges to federal agency actions – has held that the notice-and-comment rulemaking requirement extends to agency attempts to change a settled agency interpretation of a regulation.  In other words, once an agency establishes a position on a particular issue, the D.C. Circuit has required that an agency proceed through notice-and-comment procedures to change its earlier position.

In Mortgage Bankers, the D.C. Circuit held that a person challenging an agency change in policy need not show any reliance on that policy in order to claim that an agency had violated that requirement.  The court held that nothing in its prior cases required a showing of reliance.

The Supreme Court has agreed to review the case, see Perez v. Mortgage Bankers Ass’n, No. 13-1041, cert. granted 6/16/14, but on a broader issue than whether a person claiming that an agency changing its interpretation of a regulation must show reliance.  Instead, the court agreed to examine whether a federal agency must engage in notice-and-comment rulemaking before it can significantly alter an interpretive rule that articulates an interpretation of an agency regulation.  The court will hear oral argument on December 1, 2014.  Thus, the court may be poised to overrule the entire line of D.C. Circuit cases holding that an agency must engage in notice-and-comment rulemaking before changing definitive but un-codified interpretations of regulations.

A reversal of current D.C. Circuit precedent has troubling implications for the alcohol beverage industry.  Many policies of the federal agencies that regulate the industry become established through informal decisions never reduced to formal regulations.  To take one example, TTB’s policies towards the documentation of exports without payment of tax depart significantly from TTB’s published regulations, and instead rely on well-recognized and followed policies published only in informal Industry Circulars and private letter “variances” from regulations.  Consider, too, the dozens of unpublished “policies” TTB applies in the review of alcohol beverage labels, some of which go back decades and have formed the basis of entire brand propositions by the industry.  Should [...]

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