Supreme Court’s Impending Decision on Chevron Deference: Impact on FEMA Dispute Resolution

For decades, federal agencies, such as FEMA, have enjoyed considerable deference from the courts regarding the interpretation of laws and regulations applicable to the program(s) they administer, a principle known as “Chevron deferment” after the 1984 decision in Chevron v. National Resources Defense Council. In short, Chevron and its successors provide that courts give deference to an agency’s interpretation of applicable law so long as the interpretation: (i) is issued by the agency charged with its administration; (ii) generally rational or reasonable; and (iii) given in a form that would have the force of law, such as a judgment or formal rulemaking for notice and comment. Now that longstanding doctrine is under intense scrutiny as the United States Supreme Court hears two major cases¹ that can dismantle it.

What brought us here?

Recently, the Supreme Court heard arguments in two cases that decide the future of Chevron doctrine of respect on the chopping block. In both cases, the petitioners are challenging a National Marine Fisheries Service regulation that requires owners of commercial fishing vessels to pay for an observer on board. About 70 non-interested parties filed Amicus Briefs in these cases, with the majority requesting that Chevron compliance should be canceled or, at least, clarified. The main argument is that Chevron compliance violates constitutional principles of separation of powers and due process by allowing executive branch agencies to adopt rules, regulations, and purportedly controlling policy guidance, thereby usurping legislative authority and improperly displacing judicial interpretive authority in the executive branch.

While it is not yet clear how the Court will decide the pending cases, the prevailing view is that the decision(s) will involve overturning Chevron deference at least on some level, setting the stage for the potential expansion of the availability of judicial review the likes of which we have not seen since the original decision in Chevron 40 years ago.

Potential impact on review of FEMA program decisions

FEMA Public Assistance Governing Statute; Building Resilient Infrastructure and Communities (BRIC) and the Hazard Mitigation Grant Program (HMGP), the Robert T. Stafford Disaster Relief and Emergency Relief Act (Stafford Act) is written almost exclusively in permissive terms. Because of this and the specific language found in the Stafford Act, Section 305, Federal Government Impunity, courts have generally held that FEMA eligibility determinations are discretionary and therefore immune from judicial review. The few actions that have been admitted for review have almost universally failed to overcome the very high level of deference afforded to agency decisions. For these reasons, it has traditionally been extremely difficult, if not impossible, to successfully challenge FEMA’s decisions to grant or withhold funds under the Programs it administers.

The achievement of Chevron the doctrine is as large as the reach of federal regulations. Any industry subject to federal regulations could be affected by the Supreme Court’s decision. However, because the Stafford Act is quite limited in terms of specifics for FEMA programs, with FEMA instead determining eligibility in the vast majority of cases based on policy guidance it has issued in independently, FEMA’s denials may be prime targets for judicial review in the event that the high deference currently applied by the courts is no longer. This in turn would certainly result in a higher level of scrutiny of FEMA’s decisions and policies.

There is no provision in the Stafford Act authorizing judicial review of agency actions. As a result, the availability of judicial review is based primarily on the general provisions of the Administrative Procedures Act (APA). With respect to judicial review, the APA provides that “[a] “A person who suffers legal wrong by reason of agency action, or is adversely affected or harmed by agency action within the meaning of a relevant statute, is entitled to judicial review thereof.” 5 USC § 702. However, the right of general judicial review granted by the APA is subject to exception when: (1) the governing statute precludes judicial review or (2) the agency’s action is committed to the agency’s discretion by law providing that grant funds are not subject to judicial review because they are committed to agency discretion by law.

However, numerous courts have distinguished between FEMA’s initial (arguably) discretionary decision to obligate funding, and subsequent decisions that reverse those discretionary grant decisions after the funds have been expended. There are other areas of the Stafford Act that are significantly less permissive. Finally, after a specific event, there may be directives from Congress, or from the President himself, that provide more direct guidance about what FEMA must fund under its programs. If a situation presents itself in which FEMA may have lost its discretion, then the question will be whether a court will overrule what FEMA decided to do, including how it may have interpreted the Stafford Act, regulations , its own policies or Congressional/Presidential Directives, or is the court allowed to review those authorities and form its own opinion?

Federal courts have generally observed a very high level of deference to agency decisions, based primarily on Chevronfirst assessing “whether Congress has spoken directly to the precise issue at hand.” Chevron467 US at 842. If the intent of Congress is clear from the statutory language, courts would find that “we must give effect to the clearly expressed intent of Congress.” Id. at 843. However, if Congress has not spoken and the statute is “silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s response is based on a permissible construction of the statute.” Id. at 843. This is in fact what is commonly called “Chevron respect.”

If the Supreme Court overturns Chevron, or reduces its impact in some meaningful way, applicants under FEMA programs may consider asking the courts to evaluate when there is a perceived conflict between the Stafford Act and/or other applicable laws or directives, and FEMA’s interpretation of the same. Depending on what the Supreme Court does this month, the review could extend to opening the door for a court to review FEMA’s policy guidance and possibly reject it if the court finds it conflicts with higher authority. applicable high.

How should you prepare?

1. Stay Informed: Make sure you understand how the Supreme Court decision was made Chevron the change may affect any pending or past FEMA grant funding you have received or applied for. Decisions expected this month could change how federal regulations and FEMA policy guidance are interpreted and applied.
2. Assess the potential impact: Identify which sections of the Stafford Act, federal regulations, and FEMA policy guidance are at issue in any dispute you have with FEMA. Be mindful to also consider past disagreements or major denials. The applicable time limit for filing for judicial review of FEMA’s decisions under the Stafford Act is provided by 28 USCA § 2401; Time to initiate action against the United States. Subsection (a) of this section provides: “(a) Except as provided by chapter 71 of title 41, any civil action commenced against the United States shall be barred unless the complaint is filed within six years after the right first accrues. of action… “
3. Understand changes to the FEMA appeals process, CBCA arbitration, and seeking judicial review in Federal Court: Know the requirements of each process, applicable deadlines, suitability considerations, and consider how the processes fit together in order to identify the best option for your circumstances.
4. Engage legal counsel: Consult with counsel to develop a strategy for potential regulatory or policy challenges. This includes understanding new compliance requirements or exploring opportunities to challenge existing regulations or policies that may no longer apply under the new legal framework.
5. Lawyer in Cooperation: Consider joining industry groups, associations, or coalitions that are actively engaging in discussions about regulatory and policy-level reforms. Collaborate with colleagues to advocate and petition for favorable public policy and legislative outcomes.

Baker Donelson’s Disaster Recovery and Government Services professionals work proactively with state and local governments, government agencies and authorities, nonprofit organizations, and infrastructure providers to provide regulatory compliance, grant management, and legal representation that maximize access to federal funds. , ensuring its effective use, and, as necessary, coordinate and negotiate with other government entities to maintain previously received funds. If you have questions about current or anticipated FEMA grant funding, or how pending Supreme Court review and decisions involving Chevron may affect any current or past disputes, please contact Wendy Huff Ellard, Charles F. Schexnaildre or any member of Baker Donelson’s Disaster Recovery and Government Services Group.

¹ Loper Bright Enterprises v. Gina Raimondo, No. 22-451 and Relentless, Inc. v. United States Dep’t of Commerce, No. 22-1219.