Death of Chevron | Constangy, Brooks, Smith & Prophete, LLP

You may ask. What is this? Chevron respect? How did it die? Why should I care?

All questions are fair.

Let me start by answering the last question. If you own, operate, or manage a business that is covered by the complex web of federal employment laws, you should be very concerned about the death of a doctrine that has helped expand your duties and obligations for 40 years.

More on that later. Let’s go back to the beginning.

What is Chevron respect?

Chevron refers to a 1984 U.S. Supreme Court decision: Chevron USA, Inc. v. National Resources Defense CouncilIn that decision, the Supreme Court created a two-step process for courts to use in deciding lawsuits challenging the agency’s regulatory actions.

In Step One, the court determined whether Congress’s intent in enacting the statute that led to the challenged agency action was clear. If so, the court enforced that intent and struck down agency actions or constructions that were inconsistent with it.

If the statute were silent or ambiguous as to congressional intent, the court would proceed to step two and determine whether the agency had offered a “permissible” interpretation of the statute. That is not a high threshold for an agency to meet.

If the agency’s interpretation of the statute was “acceptable,” the court required uphold the regulatory action. Even if the court disagreed with the agency.

During its existence Chevron This doctrine has been routinely used to maintain countless federal regulations and has been regularly criticized for contributing to the creation of an “administrative state.”

Although they were not parties to the Chevron In this case, the decision affected the U.S. Department of Labor, the Equal Employment Opportunity Commission and the Occupational Safety and Health Administration, as well as all other agencies that interpret and enforce federal law.

However, on June 28, 2024, the current Supreme Court overturned this decision Chevron.

Loper Bright Enterprises

Loper Bright Enterprises is a family-owned and operated Atlantic fishing company regulated by the National Marine Fisheries Service.

The statute that created NMFS required certain types of fishing vessels to allow federal “observers” on board to monitor compliance with applicable regulations. Adding insult to injury, the statute also required certain vessels to pay for observers. Under the statute, there were three groups of fishing vessels that could be required to pay for observers—foreign vessels, certain restricted access vessels, and vessels in the North Pacific. The statute said nothing about requiring Atlantic fishing vessels to pay for observers.

Still, NMFS required Loper Bright to pay $710 per day for on-board observers. In 2020, the company filed a lawsuit challenging the regulation.

In the lower courts, the case fell to pieces Chevron. The motion was denied (and the motion to dismiss was upheld on appeal) because the courts found that the regulation was ambiguous and NMFS’s interpretation was “permissible.”

But Loper Bright asked the Supreme Court to reconsider. And, catching the biggest fish in the story, Loper Bright managed to get Chevron ajar.

Death Chevron

To understand why the Supreme Court overturned a 40-year-old precedent that had become entrenched in administrative law, it is necessary to go back in time a few times using Constangy’s “time-back” machine.

Founding of our Republic

The court began its analysis of Loper Bright’s claims by finding that the framers of the Constitution intended that the interpretation of laws passed by Congress be within the “proper and special jurisdiction of the courts.”

Citing numerous Supreme Court decisions from 1803 to 1932, the Court explained that the executive branch (and ultimately its agencies)’ interpretations of ambiguous statutes deserved “deference.” But “deference” meant just that, and nothing more. The executive branch’s views could help inform the judiciary, but they could not replace the court’s independent judgment about the statute’s meaning.

In short, for more than 150 years after the founding of our Republic, it was common practice for Congress to make and pass laws, the courts to interpret their meaning, and the President to enforce them.

1932 and the New Deal

In 1929, the U.S. stock market crashed and the country fell into a period known as the Great Depression. After being elected in 1932, President Franklin D. Roosevelt launched an aggressive campaign to revive the economy, which included a rapid expansion of the federal administrative state.

Despite these circumstances, federal courts continued to hold that matters of statutory interpretation were a matter for the courts, although they gave due weight to the judgments of those applying the statutes.

As a court in Loper Light summed up the story: “Nothing in the New Deal era or before it… resembled (Chevron) the respect this court will begin to show.”

1946 and the Administrative Procedure Act

As the administrative state created by the New Deal grew, Congress passed the Administrative Procedure Act as “a check on administrators whose zeal might otherwise lead them to abuses unanticipated by the legislation establishing their offices.”

To protect against such abuses, the APA provides that when a court reviews an agency’s actions, the court “shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the agency’s terms of action.”

As the Court in Loper Light The APA “codifies in agency cases a subtle but basic proposition reflected in judicial practice dating back to the earliest days of our Republic: that courts decide questions of law by applying their own judgment” rather than by mandatory deference to “acceptable” interpretations by bureaucrats.

This language in APA turned out to be the harpoon that Loper Bright needed to kill the whale, Chevron respect has become.

Back to 2024

Providing historical context, Chief Justice John Roberts, writing for the majority in Drifter Brightleft no doubt about the status Chevron when he finished,

Chevron is repealed. Courts must exercise their independent judgment in deciding whether an agency acted within its statutory authority…. Careful attention to the judgment of the executive branch can help inform that inquiry… But courts need not, and under the APA may not, defer to an agency’s interpretation of the law simply because the statute is ambiguous.

As the Chief Justice explained in his majority opinion, (1) federal courts (not administrative agencies) have the tools and expertise necessary to interpret ambiguous statutory provisions and (2) while the opinions of administrative agencies should be respected, those opinions are not binding on the courts.

What does this mean for employers

As already noted, Loper Light applies to all federal agencies and their regulatory programs, including

• DOL regulation raising the salary threshold for exemption from overtime pay.
• EEOC regulations that include abortion as a pregnancy-related medical condition under the Fairness for Pregnant Workers Act.
• Proposed regulations by the National Labor Relations Board regarding joint employer status.
• The Federal Trade Commission’s recent ban on non-compete agreements (the ban was initially scaled back and issued last week by a federal court in Texas).

Have you noticed me now?

However, there are many questions about the impact of death. Chevron.

What level of “deference” will judges show to agency interpretations? To what extent will judges apply undistorted rulings from older cases that were based on Chevron respect? How will agencies attempt to implement their regulatory programs in the post-Chevron era?

All this allows me to demonstrate my deep understanding of the obvious and say that this will not be our last article on this topic. Loper Light.