Amicus Curiae Brief — Breckinridge Health, Inc., et al., Petitioners v. Alex M. Azar, II, Secretary of Health and Human Services

No. 17-1408

In the

Supreme Court of the United States

BRECKINRIDGE HEALTH, INC. et al.,

Petitioners,

v.

ALEX M. AZAR, II, SECRETARY OF HEALTH AND

HUMAN SERVICES,

Respondent.

On Petition for Writ of Certiorari

to the United States Court of Appeals

for the Sixth Circuit

BRIEF AMICUS CURIAE OF

PACIFIC LEGAL FOUNDATION

IN SUPPORT OF PETITIONERS

ETHAN W. BLEVINS

Pacific Legal Foundation

10940 NE 33rd Place, Suite 210

Bellevue, Washington 98004

Telephone: (425) 576-0484

Email: EBlevins@pacificlegal.org

DEBORAH J. LA FETRA

Counsel of Record

ANTHONY L. FRANÇOIS

Pacific Legal Foundation

930 G Street

Sacramento, California 95814

Telephone: (916) 419-7111

Email: DLaFetra@pacificlegal.org

Counsel for Amicus Curiae Pacific Legal Foundation

i

QUESTIONS PRESENTED

1.

Whether state Medicaid payments to

hospitals that provide services to disproportionately

low income patients constitute a refund of costs those

hospitals incurred in paying state taxes ordinarily

reimbursable by Medicare, such that those taxes are

no longer “actually incurred” costs for purposes of

Medicare reimbursement.

2.

Whether courts should defer to agency

interpretation of statutes or regulations that involved

embedded questions of state law.

ii

TABLE OF CONTENTS

QUESTIONS PRESENTED ........................................ i

TABLE OF AUTHORITIES ...................................... iii

INTEREST OF AMICUS CURIAE ............................ 1

INTRODUCTION AND SUMMARY OF

REASONS TO GRANT THE PETITION................... 2

REASONS TO GRANT THE PETITION................... 4

I. THE PETITION RAISES A SIGNIFICANT

QUESTION OF NATIONAL IMPORTANCE

BECAUSE AGENCIES INTERPRET STATE

LAW IN MANY CONTEXTS ............................. 4

A.

Federal Immigration Laws Incorporate

State Law Definitions of Crimes to

Determine Deportability ............................ 5

B.

Federal Environmental Laws

Depend on Federal-State

Cooperation That Is Undermined

by Federal Court Deference to Federal

Agency Interpretation of State Law .......... 8

C.

Federal Courts Conflict as to

Whether to Defer to Agency

Determinations That Federal Law

or Regulations Preempt State Law .......... 10

II. THIS COURT SHOULD GRANT

CERTIORARI TO CONSTRAIN ANY

FURTHER EXPANSION OF THE

CONSTITUTIONALLY SUSPECT

CHEVRON DOCTRINE................................. 14

CONCLUSION.......................................................... 17

iii

TABLE OF AUTHORITIES

Cases

Adams Fruit Co., Inc. v. Barrett,

494 U.S. 638 (1990) ................................................. 7

Arkansas v. Oklahoma,

503 U.S. 91 (1992) ................................................... 9

Auer v. Robbins,

519 U.S. 452 (1997) ............................................... 11

Babbitt v. Sweet Home Chapter of Cmtys.

for a Great Or., 515 U.S. 687 (1995) ....................... 3

Berninger v. FCC,

Nos. 17-498 & 17-504 (U.S. filed Nov. 2, 2017) ...... 1

Bowen v. Georgetown Univ. Hosp.,

488 U.S. 204 (1988) ................................................. 3

Bragg v. W. Va. Coal Ass’n,

248 F.3d 275 (4th Cir. 2001), cert. denied,

534 U.S. 1113 (2002) ............................................... 9

Breckinridge Health, Inc. v. Price,

869 F.3d 422 (6th Cir. 2017) ................................ 2-4

Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc.,

467 U.S. 837 (1984) ........................................passim

Cole v. U.S. Att’y. Gen.,

712 F.3d 517 (11th Cir. 2013) ................................. 6

Commonwealth Edison Co. v. Vega,

174 F.3d 870 (7th Cir. 1999) ................................. 12

Contreras v. Holder,

754 F.3d 286 (5th Cir. 2014) ................................... 5

De Lima v. Sessions,

867 F.3d 260 (1st Cir. 2017).................................... 7

iv

Efagene v. Holder,

642 F.3d 918 (10th Cir. 2011) ................................. 5

Egan v. Delaware River Port Authority,

851 F.3d 263 (3d Cir. 2017)................................... 15

Gloucester Cty. Sch. Bd. v. G.G.,

137 S. Ct. 1239 (2017) ............................................. 1

Gonzales v. Oregon,

546 U.S. 243 (2006) ............................................... 14

Gutierrez-Brizuela v. Lynch,

834 F.3d 1142 (10th Cir. 2016) ............................. 14

Hamdan v. I.N.S.,

98 F.3d 183 (5th Cir. 1996) ..................................... 6

In re S–S–, 21 I. & N. Dec. 900 (B.I.A. 1997) ............. 6

Knapik v. Ashcroft,

384 F.3d 84 (3d Cir. 2004)....................................... 7

Louisiana Pub. Serv. Comm’n v. FCC,

476 U.S. 355 (1986) ............................................... 10

Lovano v. Lynch,

846 F.3d 815 (6th Cir. 2017) ................................... 6

Lucia v. SEC,

No. 17-130 (U.S. filed Aug. 25, 2017) ..................... 1

Luminant Generation Co., LLC v. U.S. E.P.A.,

675 F.3d 917 (5th Cir. 2012) ................................... 8

Marbury v. Madison,

5 U.S. (1 Cranch) 137 (1803). ................................ 13

Medtronic, Inc. v. Lohr,

518 U.S. 470 (1996) ............................................... 11

v

Metro. Wash. Airports Auth. v. Citizens for

the Abatement of Aircraft Noise, Inc.,

501 U.S. 252 (1991) ............................................... 14

Michel v. I.N.S.,

206 F.3d 253 (2d Cir. 2000)..................................... 7

Motor Vehicle Mfrs. Ass’n of the U.S. Inc. v. State

Farm Mut. Auto. Ins. Co.,

463 U.S. 29 (1983) ............................................... 3, 9

Nat’l Cable & Telecomms. Ass’n v. Brand X Internet

Servs., 545 U.S. 967 (2005) ................................... 14

Nat’l Fed’n of Indep. Bus. v. Sebelius,

567 U.S. 519 (2012) ........................................... 4, 16

Nat’l Rest. Ass’n v. Dep’t of Labor,

No. 16-920 (U.S. filed Feb. 21, 2016) ...................... 1

New York v. F.E.R.C.,

535 U.S. 1 (2002) ................................................... 10

New York v. United States,

505 U.S. 144 (1992) ............................................... 16

NLRB v. Noel Canning,

134 S. Ct. 2550 (2014) ........................................... 14

Orthopaedic Hosp. v. Belshe,

103 F.3d 1491 (9th Cir. 1997) ................................. 10

PLIVA, Inc. v. Mensing,

564 U.S. 604 (2011) ............................................... 11

Printz v. United States,

521 U.S. 898 (1997) ............................................... 16

Ramirez v. Sessions,

_ F.3d _, 2018 WL 1802391

(4th Cir. Apr. 17, 2018) ........................................... 7

vi

Rodriguez-Castro v. Gonzales,

427 F.3d 316 (5th Cir. 2005) ................................... 6

Sackett v. EPA,

566 U.S. 120 (2012) ................................................. 1

Santos v. Gonzales,

436 F.3d 323 (2d Cir. 2006)..................................... 5

Scialabba v. Cuellar de Osorio,

134 S. Ct. 2191 (2014) ............................................. 5

Shaya v. Holder,

586 F.3d 401 (6th Cir. 2009) ................................ 6-7

Sierra Club v. Adm’r, U.S. E.P.A.,

496 F.3d 1182 (11th Cir. 2007) ............................... 8

Smiley v. Citibank (South Dakota), N.A.,

517 U.S. 735 (1996) ............................................... 11

Soliman v. Gonzales,

419 F.3d 276 (4th Cir. 2005) ................................... 7

Stern v. Marshall,

564 U.S. 462 (2011) ............................................... 16

Sturgeon v. Frost,

136 S. Ct. 1061 (2016) ............................................. 1

Tennessee v. FCC,

832 F.3d 597 (6th Cir. 2016) ................................. 13

Teper v. Miller,

82 F.3d 989 (11th Cir. 1996) ............................ 11-12

Turner v. Perales,

869 F.2d 140 (2d Cir. 1989)................................ 9-10

U.S. Army Corps of Eng’rs v. Hawkes,

136 S. Ct. 1807 (2016) ............................................. 1

vii

United States v. Mead Corp.,

533 U.S. 218 (2001) ................................................. 2

Watters v. Wachovia Bank, N.A.,

550 U.S. 1 (2007) .............................................. 10-11

Wyeth v. Levine,

555 U.S. 555 (2009) ............................................... 11

Youngstown Sheet & Tube Co. v. Sawyer,

343 U.S. 579 (1952) ............................................... 14

Statutes

33 U.S.C. §§ 1251-1388 ............................................... 9

Regulation

22 C.F.R. § 40.21 (2006).............................................. 6

Rules

U.S. Sup. Ct. R. 37.2(a) ............................................... 1

U.S. Sup. Ct. R. 37.6 ................................................... 1

Other Authorities

Alder, Jonathan H. & Stewart, Nathaniel,

Is the Clean Air Act Unconstitutional?

Coercion, Cooperative Federalism and

Conditional Spending After NFIB v. Sebelius,

43 Ecology L.Q. 671 (2016) ..................................... 8

Eskridge, William N., Jr.,

Vetogates, Chevron, Preemption,

83 Notre Dame L. Rev. 1441 (2008) ..................... 12

Kethledge, Raymond M.,

Ambiguities and Agency Cases: Reflections

After (Almost) Ten Years on the Bench,

70 Vand. L. Rev. En Banc 315 (2017) ................... 15

viii

Merrill, Thomas W.,

Preemption and Institutional Choice,

102 Nw. U. L. Rev. 727 (2008) ........................ 12, 16

Schiff, Damien,

Keeping the Clean Water Act Cooperatively

Federal—Or, Why the Clean Water Act Does Not

Directly Regulate Groundwater Pollution, 42 Wm.

& Mary Envtl. L. & Pol’y Rev. 447 (2018) .............. 9

Walker, Christopher, J.,

Inside Agency Statutory Interpretation,

67 Stan. L. Rev. 999 (2015) ................................... 15

1

INTEREST OF AMICUS CURIAE

Pacific Legal Foundation (PLF) is widely

respected as an experienced advocate of constitutional

boundaries, including the separation of powers. 1 PLF

has participated as lead counsel or amicus curiae in

several cases before this Court involving the

relationship between the judicial power and the

administrative state, including Berninger v. FCC,

Nos. 17-498 & 17-504 (U.S. filed Nov. 2, 2017); Lucia

v. SEC, No. 17-130 (U.S. filed Aug. 25, 2017);

Gloucester Cty. Sch. Bd. v. G.G., 137 S. Ct. 1239

(2017); Nat’l Rest. Ass’n v. Dep’t of Labor, No. 16-920

(U.S. filed Feb. 21, 2016); U.S. Army Corps of Eng’rs

v. Hawkes, 136 S. Ct. 1807 (2016); Sturgeon v. Frost,

136 S. Ct. 1061 (2016); and Sackett v. EPA, 566 U.S.

120 (2012). PLF is particularly interested in the

second question presented by this case—the extent to

which federal courts should defer to federal agency

interpretation of state laws, including state laws that

work in conjunction with federal statutes. Given the

expansiveness of the federal administrative state,

entrenched largely due to the deference granted to its

policies, PLF urges this Court to accept this case to

establish firm boundaries to prevent judicial

1 Pursuant to this Court’s Rule 37.2(a), all parties have consented

to the filing of this brief. Counsel of record for all parties received

notice at least 10 days prior to the due date of the Amicus

Curiae’s intention to file this brief. Pursuant to Rule 37.6,

Amicus Curiae affirms that no counsel for any party authored

this brief in whole or in part, and no counsel or party made a

monetary contribution intended to fund the preparation or

submission of this brief. No person other than Amicus Curiae, its

members, or its counsel made a monetary contribution to its

preparation or submission.

2

deference to federal agency interpretations of state

law.

INTRODUCTION AND SUMMARY

OF REASONS TO GRANT THE PETITION

“Critical access hospitals” in rural Kentucky

serve indigent patients in isolated areas of the state.

To help these cash-strapped facilities remain open

and provide healthcare to underserved populations,

Congress enacted subsidies for these hospitals via the

Medicare and Medicaid laws and regulations to

reimburse reasonable costs. In 2009, the Department

of Health and Human Services (HHS) enacted a new

policy to administer these subsidies by interpreting

Kentucky tax laws in a way that effectively reduced

the amount of reimbursement. Breckinridge Health,

Inc. v. Price, 869 F.3d 422, 424-25 (6th Cir. 2017).

Several rural health providers sued, but the district

court and Sixth Circuit applied Chevron deference 2 to

the agency’s interpretation of the state tax laws and

ruled that HHS’s policy decision was not “arbitrary,

capricious, or manifestly contrary to the Medicare

statute.” Id. at 424.

Chevron deference applies only “when it

appears that Congress delegated authority to the

agency generally to make rules carrying the force of

law, and that the agency interpretation claiming

deference was promulgated in the exercise of that

authority,” United States v. Mead Corp., 533 U.S. 218,

226-27 (2001), and when the agency has “the degree of

regulatory expertise necessary to [the] enforcement”

2 See Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S.

837 (1984).

3

of the provision at issue. Babbitt v. Sweet Home

Chapter of Cmtys. for a Great Or., 515 U.S. 687, 70304, 708 (1995). Neither justification applies when a

federal agency interprets state law that the agency

neither enforces nor administers.

The Sixth Circuit in this case deferred not only

to the HHS interpretation of the Medicaid and

Medicare laws and regulations (which Chevron

sometimes permits), 3 but also to the agency’s

interpretation of related Kentucky statutes, holding

that the agency’s view of those statutes “seems

plausible.” Breckinridge, 869 F.3d at 427. As noted in

the Petition for Writ of Certiorari at 22-23, circuit

courts are split as to whether Chevron deference ever

applies with regard to agency interpretation of state

laws. The issue is of national importance because it

extends well beyond the Medicare and Medicaid

statutes considered here. As shown below, agencies

are called upon to interpret state laws and regulations

in a variety of contexts, raising significant federalism

concerns. Given the serious constitutional questions

about Chevron deference’s compliance with the

separation of powers, this Court should not permit it

to expand.

3 Whether broadly or narrowly construed, the Chevron doctrine

has its exceptions and limits. See, e.g., Motor Vehicle Mfrs. Ass’n

of the U.S. Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43

(1983); Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 212-13,

(1988) (“We have never applied [Chevron deference] to agency

litigating positions that are wholly unsupported by regulations,

rulings, or administrative practice . . . Congress has delegated to

the administrative official and not to appellate counsel . . . .”

(internal quotation marks omitted)).

4

This Court should grant the petition and, on the

merits, hold that no deference is warranted when

federal agencies interpret state law.

REASONS TO GRANT THE PETITION

I.

THE PETITION RAISES

A SIGNIFICANT QUESTION OF

NATIONAL IMPORTANCE BECAUSE

AGENCIES INTERPRET STATE LAW IN

MANY CONTEXTS

In this case, the Sixth Circuit deferred to the

Department of Health and Human Services’

interpretation of a Kentucky law when determining

the law’s effect under federal Medicare and Medicaid

statutes. Breckinridge, 869 F.3d at 425. Medicaid, like

many

wide-ranging

statutes,

incorporates

“cooperative federalism” that depends on state laws

and regulations to further the federal statute’s goals.

See Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S.

519, 625 (2012) (Ginsburg, J., dissenting) (“Medicaid

is a prototypical example of federal-state cooperation

in serving the Nation’s general welfare.”). The first

question presented asks this Court to interpret those

statutes in a way that protects critical access

hospitals’ reimbursements. But the second question

presented, challenging the federal court’s invocation

of Chevron to defer to a federal agency’s interpretation

of state law, transcends the particular Medicare and

Medicaid statutes at issue in this case. In fact, many

federal statutes are administered within the context

of state law. These include the following, which have

generated considerable published case law, and

multiple cases in conflict with the decision below.

5

A.

Federal Immigration Laws

Incorporate State Law Definitions

of Crimes to Determine Deportability

The federal Board of Immigration Appeals

(BIA) interprets the Immigration and Nationality Act

(INA) in the regular course of its duties. These

interpretations typically receive Chevron deference.

Scialabba v. Cuellar de Osorio, 134 S. Ct. 2191, 2203

(2014) (plurality). In some cases, the court must

determine whether conviction of a state law crime is a

deportable offense as defined by federal statutes, at

which point the federal court must decide whether to

defer to the BIA’s interpretation of the state law. Some

circuit courts do; most do not.

For example, in Santos v. Gonzales, the Second

Circuit accorded Chevron deference to the BIA’s

interpretation of the federal immigration act in

determining the meaning of “sexual abuse of a minor,”

but refused to defer to the BIA’s decision that a

conviction under state law meets that definition. 436

F.3d 323, 325 (2d Cir. 2006). The court reviewed the

interpretation of state law de novo. Id. The Fifth

Circuit applied the same rule when considering the

BIA’s determination that, under state law, an alien

had committed an “aggravated felony” rendering him

ineligible for cancellation of removal under the

Nicaraguan Adjustment and Central American Relief

Act. Contreras v. Holder, 754 F.3d 286, 289 (5th Cir.

2014) (“While we owe deference to the BIA’s

interpretation of the INA, pursuant to Chevron USA,

Inc. v. NRDC, we review de novo whether an offense

constitutes an aggravated felony.”) (footnotes

omitted); Efagene v. Holder, 642 F.3d 918, 921 (10th

Cir. 2011) (“[T]he BIA is owed no deference to its

6

interpretation of the substance of the state-law

offense at issue, as Congress has not charged it with

the task of interpreting a state criminal code.”).

Similarly, the INA allows for deportation of

aliens who commit a “crime involving moral

turpitude,” but the federal statute does not define that

term, leaving it to the BIA to do so. Rodriguez-Castro

v. Gonzales, 427 F.3d 316, 319-20 (5th Cir. 2005). See

also 22 C.F.R. § 40.21 (2006) (defining crimes with

reference to the jurisdiction in which they occurred);

Hamdan v. I.N.S., 98 F.3d 183, 186 (5th Cir. 1996)

(citing BIA decisions interpreting phrase). The

regulation and BIA decisions are entitled to Chevron

deference only to the extent they interpret the

ambiguous phrase in the INA. Multiple circuits refuse

to accord such deference to the BIA’s interpretation

and evaluation of state law in deciding whether a

particular state law is a crime involving moral

turpitude. See, e.g., Rodriguez-Castro, 427 F.3d at

320; Lovano v. Lynch, 846 F.3d 815, 817 (6th Cir.

2017) (“The BIA’s interpretation of a state criminal

statute, . . . is not entitled to deference and is reviewed

de novo.”).

In Shaya v. Holder, 586 F.3d 401, 406 (6th Cir.

2009), the Sixth Circuit considered Michigan’s

mandatory sentencing laws that obligated the courts,

when confronted with an indeterminate sentence, to

set the maximum penalty provided by the state law as

the maximum term. Because the BIA measures all

indeterminate sentences by their maximum possible

term, Cole v. U.S. Att’y Gen., 712 F.3d 517, 531 (11th Cir.

2013) (citing In re S–S–, 21 I. & N. Dec. 900, 902-3 (B.I.A.

1997)), the Sixth Circuit reasoned that “determining the

length of [a] sentence is less an exercise in interpreting

7

the INA provision than it is interpreting state

sentencing law.” Shaya, 586 F.3d. at 406. Shaya

therefore held that “these kinds of [state law]

determinations by the BIA are not entitled to Chevron

deference,” id., and conducted a de novo review of

Michigan law to determine how to measure an

indeterminate sentence. Id. at 406-08. See also

Knapik v. Ashcroft, 384 F.3d 84, 88 (3d Cir. 2004)

(“[I]n determining what the elements are of a

particular criminal statute deemed to implicate moral

turpitude, we do not defer to the BIA.”); Michel v.

I.N.S., 206 F.3d 253, 262 (2d Cir. 2000) (when “the

BIA is interpreting state or federal criminal laws, we

must review its decision de novo”).

Most recently, in Ramirez v. Sessions, _ F.3d _,

2018 WL 1802391 (4th Cir. Apr. 17, 2018), the Fourth

Circuit applied the rule that it should defer under

Chevron “to BIA decisions interpreting the INA but

not the agency’s interpretations of state criminal law

and other statutes that lie beyond the BIA’s authority

and expertise.” Id. at *4 (citing Soliman v. Gonzales,

419 F.3d 276, 281 (4th Cir. 2005)). This case is

significant because its holding extends beyond state

criminal laws (see Adams Fruit Co., Inc. v. Barrett,

494 U.S. 638 (1990)) to any state law that extends

beyond the scope of delegation to the agency. See also

De Lima v. Sessions, 867 F.3d 260, 264 (1st Cir. 2017)

(Chevron “not implicated” in the “interpretation of a

state statute”).

8

B.

Federal Environmental Laws

Depend on Federal-State Cooperation

That Is Undermined by Federal Court

Deference to Federal Agency

Interpretation of State Law

Chevron itself accorded deference to the

Environmental Protection Agency’s interpretation of

an ambiguous Clean Air Act provision defining the

word “source.” Chevron, 467 U.S. at 840 n.1, 860. The

extent to which courts apply Chevron deference to

agency actions under wide-ranging environmental

laws also demonstrates the nationwide importance

and scope of the question presented in this case.

Although modeled on “cooperative federalism,”

the Clean Air Act is “a source of persistent federalstate conflict.” Jonathan H. Adler & Nathaniel

Stewart, Is the Clean Air Act Unconstitutional?

Coercion, Cooperative Federalism and Conditional

Spending After NFIB v. Sebelius, 43 Ecology L.Q. 671,

672 (2016). For example, in Sierra Club v. Adm’r, U.S.

E.P.A., 496 F.3d 1182, 1186-88 (11th Cir. 2007), the

Eleventh Circuit applied Chevron deference to the

EPA’s interpretation of an ambiguous Georgia state

regulation that imposed certain permit conditions on

applicants who owned or operated any existing noncompliant “major stationary sources” of pollution. But

in Luminant Generation Co., LLC v. U.S. E.P.A., 675

F.3d 917, 926 (5th Cir. 2012), the Fifth Circuit held

that the EPA acted arbitrarily and capriciously by

relying on state law standards to invalidate a permit

application, rather than focusing solely on the

statutory requirements of the Clean Air Act, in

making its decision. Id. (State law is a “factor[ ] which

9

Congress has not intended [the EPA] to consider.”)

(citing State Farm, 463 U.S. at 43).

Like the Clean Air Act, the Clean Water Act, 33

U.S.C. §§ 1251-1388, depends on “cooperative

federalism” to effect its goals. See Arkansas v.

Oklahoma, 503 U.S. 91, 101 (1992) (“The Clean Water

Act anticipates a partnership between the States and

the Federal Government . . . .”); Damien Schiff,

Keeping the Clean Water Act Cooperatively Federal—

Or, Why the Clean Water Act Does Not Directly

Regulate Groundwater Pollution, 42 Wm. & Mary

Envtl. L. & Pol’y Rev. 447, 456-58 (2018) (describing

crucial state responsibilities in regulating and

permitting decisions, particularly as regards nonpoint

source pollution). In Arkansas, this Court effectively

“federalized” agency-approved state law water quality

standards, noting that once these standards are

approved by the EPA, they “are part of the federal law

of water pollution control.” 503 U.S. at 110. But cf.

Bragg v. W. Va. Coal Ass’n, 248 F.3d 275, 289 (4th Cir.

2001), cert. denied, 534 U.S. 1113 (2002) (after agency

approval of state laws and regulations under Surface

Mining Control and Reclamation Act of 1977, federal

law “drop[s] out” and no longer regulates the approved

mining activities). 4

4 Not all “cooperative federalism” statutes involve environmental

law. While acknowledging Chevron’s policy underpinnings

emphasizing the need for expertise and uniformity when

administering federal environmental statutes, the Second

Circuit distinguished federal welfare assistance programs as

lacking any expectation of “unitary or uniform application from

state to state.” Turner v. Perales, 869 F.2d 140, 141 (2d Cir.

1989). For this reason, federal courts had no reason under

Chevron to defer to an agency on the question of whether state

10

A decision in the present case is needed to

clarify the federal courts’ role in interpreting state

laws that work in conjunction with federal

environmental laws.

C.

Federal Courts Conflict as to

Whether to Defer to Agency

Determinations That Federal Law

or Regulations Preempt State Law

This Court’s decision in Watters v. Wachovia

Bank, N.A., 550 U.S. 1, 20 (2007), did not decide

whether a federal agency is entitled to Chevron

deference when the agency states that its regulations

preempt state law. Justice Stevens’ dissenting

opinion, 5 however, underscored the tension between

Chevron deference and preemption created by the fact

that members of Congress can be counted upon to

reflect their constituents’ interests with “a healthy

respect for state sovereignty,” while federal agencies

have no such interest or accountability. Id. at 41

(Stevens, J., dissenting). Cf. New York v. F.E.R.C., 535

U.S. 1, 18 (2002) (A “federal agency may pre-empt

state law only when and if it is acting within the scope

of its congressionally delegated authority[,] . . . [for]

an agency literally has no power to act, let alone preempt the validly enacted legislation of a sovereign

State, unless and until Congress confers power upon

it.”, (quoting Louisiana Pub. Serv. Comm’n v. FCC,

476 U.S. 355, 374 (1986)). Nonetheless, the agencies

law and implementing regulations complied with the federal law.

Id. Accord Orthopaedic Hosp. v. Belshe, 103 F.3d 1491, 1495 (9th

Cir. 1997).

5 Joined by Chief Justice Roberts and Justice Scalia.

11

can, “with relative ease . . . promulgate comprehensive

and detailed regulations that have broad pre-emption

ramifications for state law.” Watters, 550 U.S. at 20

(citing Medtronic, Inc. v. Lohr, 518 U.S. 470, 512

(1996) (O’Connor, J., concurring in part and

dissenting in part) (“It is not certain that an agency

regulation determining the pre-emptive effect of any

federal statute is entitled to deference”)). Cf. Smiley v.

Citibank (South Dakota), N.A., 517 U.S. 735, 744

(1996) (assuming, without deciding, that the question

of “whether a statute is pre-emptive . . . must always

be decided de novo by the courts”). 6

In Teper v. Miller, 82 F.3d 989, 998 (11th Cir.

1996), the Eleventh Circuit pondered the “inherent

tension between Chevron deference, which only

obtains where a statute is ‘silent or ambiguous,’ and

preemption doctrine, which maintains that state law

will not be preempted unless that is ‘the clear and

manifest purpose of Congress[.]’” (citations omitted.)

It further highlighted that while Chevron may

“counsel in favor” of deference to resolve questions

raised by ambiguous statutes, “countervailing

federalism concerns offset this rationale” in

preemption cases. Id. At bottom, the court noted,

“[a]lthough federal agencies are more democratically

accountable than courts, state legislatures are

The Court was more concrete in its refusal to extend Auer

deference to agency preemption decisions. In PLIVA, Inc. v.

Mensing, 564 U.S. 604 (2011), with regard to deference under

Auer v. Robbins, 519 U.S. 452, 461-62 (1997), this Court held

that, although it would “defer to the agency’s interpretation of its

regulations, we do not defer to an agency’s ultimate conclusion

about whether state law should be pre-empted.” PLIVA, 564 U.S.

at 613 n.3 (citing Wyeth v. Levine, 555 U.S. 555, 576 (2009)).

6

12

arguably yet more politically accountable.” Id. For this

reason, the court argued that “it is not at all clear that

a state’s view that a federal statute does not preempt

state law should give way to a federal agency’s view

that the statute does preempt.” Id. See also Thomas

W. Merrill, Preemption and Institutional Choice, 102

Nw. U. L. Rev. 727, 755 (2008) (“[I]n terms of their

capacity to engage in good faith interpretation of state

regulatory law, including both state common law and

state legislation, it is doubtful that agencies can

match the capabilities of the courts.”).

Yet this Court does defer in some—but not all—

preemption cases, and it is not always clear why one

approach prevails over the other. Professor William

Eskridge lists 131 cases decided by this Court between

the date of the Chevron decision in 1984 and the close

of the 2005 Term in which preemption of state law was

at issue and a federal agency rule, order, or

interpretation was relevant to the Court’s decision.

William N. Eskridge, Jr., Vetogates, Chevron,

Preemption, 83 Notre Dame L. Rev. 1441, 1442, App.

A (2008). These cases covered a panoply of issues,

including pensions, civil rights, Indian law,

transportation policy, public health and safety law,

taxation, and energy policy. Id. Despite this

prevalence of agency preemption cases, this Court has

not yet resolved whether it is “appropriate to defer to

an agency that is seeking to expand federal power at

the expense of the states through a generous construal

of a preemption clause.” Commonwealth Edison Co. v.

Vega, 174 F.3d 870, 875 (7th Cir. 1999) (citing

additional circuit cases in conflict).

The Sixth Circuit itself is in conflict on this

point. Contrary to its approach in this case, in

13

Tennessee v. FCC, 832 F.3d 597, 611 (6th Cir. 2016),

that court carefully avoided treading on state

prerogatives by refusing to grant Chevron deference

to

a

Federal

Communication

Commission’s

interpretation of the Telecommunication Act of 1996

that intermeddled in core state functions by

preempting state law relating to the power and

discretion

of

political

subdivisions

(e.g.,

municipalities). While under state law, Tennessee

retained discretion to make decisions applicable to its

political subdivisions, the FCC interpreted the

Telecommunications Act to devolve that discretion to

the political subdivisions themselves. The Sixth

Circuit invalidated the FCC’s interpretation. Id. (“Any

attempt by the federal government to reorder the

decision-making structure of a state and its

municipalities trenches on the core sovereignty of that

state.”).

The doctrine of Chevron deference as applied to

federal agency interpretation of state law is difficult

to square with the respect for state sovereignty

present in the preemption rules. A decision in this

case could clarify that while the Supremacy Clause

demands that state laws not interfere with federal

law, at least federal courts—not agency bureaucrats—

will make the determination of “what the law is.”

Marbury v. Madison, 5 U.S. (1 Cranch) 137, 177

(1803).

14

II.

THIS COURT SHOULD GRANT

CERTIORARI TO CONSTRAIN ANY FURTHER

EXPANSION OF THE CONSTITUTIONALLY

SUSPECT CHEVRON DOCTRINE

“The doctrine of the separation of powers was

adopted by the Convention of 1787 not to promote

efficiency but to preclude the exercise of arbitrary

power.” Youngstown Sheet & Tube Co. v. Sawyer, 343

U.S. 579, 629 (1952) (Douglas, J., concurring) (citation

omitted). The constitutional preclusion of arbitrary

power is necessary to preserve and protect individual

liberty. See NLRB v. Noel Canning, 134 S. Ct. 2550,

2559 (2014); Metro. Wash. Airports Auth. v. Citizens

for the Abatement of Aircraft Noise, Inc., 501 U.S. 252,

272 (1991) (The “ultimate purpose of th[e] separation

of powers is to protect the liberty and security of the

governed.”). The arbitrariness is magnified because,

even when agencies may change their interpretations

at will and take inconsistent positions, courts

nonetheless apply Chevron deference. See Nat’l Cable

& Telecomms. Ass’n v. Brand X Internet Servs., 545

U.S. 967, 981 (2005).

All or most Chevron applications are

unconstitutional (or at least highly questionable)

because they violate a federal judge’s Article III duty

to render independent rulings. See Gonzales v.

Oregon, 546 U.S. 243, 264 (2006) (noting “obvious

constitutional problems” if the Attorney General could

“authoritatively interpret” state and local laws). See

also Gutierrez-Brizuela v. Lynch, 834 F.3d 1142, 1149

(10th Cir. 2016) (Gorsuch, J., concurring) (Chevron

“permit[s] executive bureaucracies to swallow huge

15

amounts of core judicial and legislative power and

concentrate federal power in a way that seems more

than a little difficult to square with the Constitution

of the framers’ design.”); Egan v. Delaware River Port

Authority, 851 F.3d 263, 280 (3d Cir. 2017) (Jordan, J.,

concurring in the judgment) (agencies govern, “not

merely by enforcing laws passed by the people’s

representatives, but through their own vast and

largely unaccountable power” and deference weakens

the constitutional “brakes” on federal government).

Raymond M. Kethledge, Ambiguities and Agency

Cases: Reflections After (Almost) Ten Years on the

Bench, 70 Vand. L. Rev. En Banc 315, 324 (2017)

(“There is no getting around the fact that Chevron

deference has created a palpable sense of entitlement

among executive agencies, particularly when they

show up in court.”). 7

In this case, the usual justification for

deference does not apply when a federal agency

interprets state law that the agency neither enforces

nor administers. Hence, the Court should not expand

Chevron deference, especially when its own theory

cannot support it.

Agencies know a great deal about one

federal regulatory scheme, and they may

know quite a bit about the pros and cons

of making that particular scheme the

7 Bureaucrats interpret their power more aggressively when they

believe that courts will defer to their interpretations. See

Christopher J. Walker, Inside Agency Statutory Interpretation,

67 Stan. L. Rev. 999, 1063 (2015) (In a survey of agency rule

drafters, 80% strongly agreed or somewhat agreed “that a federal

agency is more aggressive in its interpretive efforts if it is

confident that Chevron deference . . . applies.”).

16

exclusive source of legal obligation, as

opposed to one that exists concurrently

with state and local regulation. But they

are unlikely to have much knowledge—

or even care—about larger questions

concerning the division of authority

between the federal government and the

states.

Merrill, Preemption and Institutional Choice, 102 Nw.

L. Rev. at 755. See also Stern v. Marshall, 564 U.S.

462, 503 (2011) (the Administrative State’s “slight

encroachments create new boundaries from which

[its] legions of power [] seek new territory to capture.”

(quotation marks and citation omitted)).

Moreover, Congress does not have any of the

state’s legislative power so it cannot delegate such

power to a federal agency. In fact, the anticommandeering doctrine serves in part as a bulwark

to prevent Congress from legislating for the states.

Printz v. United States, 521 U.S. 898, 926-27 (1997)

(citing New York v. United States, 505 U.S. 144, 17576 (1992)); see also NFIB, 567 U.S. at 584-85 (striking

down commandeering of states “into the national

bureaucratic army” for Medicaid expansion) (citation

omitted). By applying Chevron deference in this case,

the Sixth Circuit improperly and implicitly presumed

that the Medicare and Medicaid statutes effectively

determine the content of related state laws. This

approach raises important constitutional questions

that should be reviewed by this Court.

17

CONCLUSION

The petition for a writ of certiorari should be

granted.

DATED: May, 2018.

Respectfully submitted,

DEBORAH J. LA FETRA

Counsel of Record

ANTHONY L. FRANÇOIS

ETHAN W. BLEVINS

Pacific Legal Foundation

930 G Street

Sacramento, California 95814

Telephone: (916) 419-7111

E-mail: DLaFetra@pacificlegal.org

Counsel for Amicus Curiae Pacific Legal Foundation