Supreme Court Overturns Chevron Defer Rule in Landmark Decision

When there is ambiguity in a statute that Congress has not chosen among reasonable interpretations, who decides which possible interpretation should apply? For almost four decades, courts have applied the principle Chevron USA, Inc. v. Natural Resources Defense Council, Inc.467 U.S. 837 (1984), which held that recourse should be had to the “permissible” interpretation provided by a federal agency implementing the statute through regulations.

Last week, the Supreme Court ruled by a 6-3 majority, Loper Bright Enterprises v. Raimondo603 US ____ (2024), which repealed Chevron and held that federal courts must always be the final decision-makers on the meaning of statutes. Agency interpretations of implementing statutes are no longer entitled to special deference, even when there are gaps and ambiguities in the statute, and courts now have full authority to decide for themselves the best interpretation.

Loper Light will certainly have far-reaching implications. It not only debunks Chevron—a staple of administrative law jurisprudence and one of the most cited Supreme Court decisions of all time—but it will also have a significant impact on the agency’s existing regulations, making the agency’s statutory interpretations vulnerable to new challenges and conflicting results, and potentially weakening the utility of the agency’s guidance to regulated parties.

This Chevron Doctrine

Since 1984, federal courts have applied a two-step analysis, commonly known as the “Chevron despect.” In Step One, the court asked whether Congress had directly addressed the specific question at issue. If the text of the applicable statute and reasonable inferences led to a clear answer about Congress’s intent, the analysis ended there. If the statute was ambiguous, however, the court asked in Step Two whether the agency’s interpretation was permissible and, if so, deferred to that interpretation. As a result, agencies were often the final arbiters of the meaning of the statutes they implemented.

Loper Bright vs Raimondo

Loper Light The MSA concerned an issue arising from the Magnuson-Stevens Fishery Conservation and Management Act (“MSA”), an act administered by the National Marine Fisheries Service (“NMFS”), a branch of the National Oceanic and Atmospheric Administration of the Department of Commerce responsible for research and management of fish, marine life, and their habitats. The MSA governs fisheries management within approximately 200 nautical miles of the coastline. It requires domestic vessels to carry at least one observer while fishing to collect data necessary for the conservation and management of fisheries resources. The costs associated with observers are covered by three statutorily designated fishing vessel groups. Despite this limitation, in 2020, NMFS issued a rule requiring all fishermen to pay for observers if federal funds become unavailable. NMFS sought authorization from the MSA provision that NMFS may add further requirements as it deems necessary and appropriate for the conservation and management of the fishery.

The main case involved Atlantic herring fishermen who would have to pay about $710 per day for the cost of an observer on their vessels under the 2020 rules. The second case involved the owners of those vessels. Lower courts used a two-step procedure Chevron approach and upheld the NMFS regulations.

Majority opinion

The Supreme Court issued a writ of certiorari and reversed the judgment ChevronThe essence of the Court’s argument was that Chevron deference is inconsistent with the Administrative Procedure Act (“APA”). As the majority explained, the APA does not provide for deference to agencies but rather directs courts to “interpret constitutional and statutory provisions.” While the executive branch’s interpretations of statutes are to be treated “with the greatest deference,” that deference is no substitute for judicial judgment. Article III of the Constitution assigns to the federal courts the responsibility and authority to adjudicate “cases” and “controversies,” and the Framers intended that the final interpretation of laws would be in the hands of the courts alone. The APA embodies this “traditional conception of the judicial function” that is incompatible with Chevron‘Susan to the agencies’ interpretation of the regulations. Justice Thomas emphasized this point in his concurrence, saying that Chevron violated the constitutional principle of separation of powers by limiting the judicial power to a check on the executive power.

The court also found that old decisionsthe doctrine governing the observance of precedents by courts did not require the Court to maintain ChevronThe court noted that attempts at reform Chevron doctrine over the past decades has only complicated the investigation. According to the Court, Chevron deference became a “license to authorize the agency to change positions at will” and failed to protect the interests of trust, thus undermining the very values ​​of the rule of law that old decisions existed to protect. Justice Gorsuch repeated this theme in his concurrence, saying that old decisions forced the Court to reject Chevron due to its inconsistency with the APA and the historical role of the judiciary as interpreter of statutes.

Justice Kagan’s dissent

While the majority believed that the decision restored to the judicial branch the interpretive authority over the statutes that enabled the agency to act, the dissent viewed it as an inappropriate reassignment of that authority. Justice Kagan—joined by Justices Sotomayor and Jackson—defended Chevronunderstanding that Congress intended that the agency entrusted by Congress to administer the statute would use its expertise to resolve an ambiguity or fill a gap in interpretation. The agencies are experts in the field and are part of the policy branch better suited to answer policy questions related to resolving statutory ambiguities.

Touching on a theme she has often emphasized, Justice Kagan argued that old decisions he advised not to overthrow Chevronwhich became “more than a single decision” and served to increase the predictability of agency regulation. Because courts deferred to agencies only after they had exhausted the normal tools of statutory interpretation, agency expertise and experience played a limited but salutary role. Even then, the court would scrutinize the agency to make sure it was operating within the zone of reasonable options.

Consequences Loper Light

With the release of Loper LightThe Supreme Court continues to transform administrative law in fundamental ways. Two terms ago, in West Virginia vs. EPA597 U.S. 697, 716 (2022), the Court adopted the “principal questions” doctrine, which holds that agencies are not authorized to make “decisions of great economic and political importance” unless Congress so enacts in particularly clear terms. The Court reiterated this doctrine last term in Biden vs Nebraska143 S. Ct. 2355 (2023), which invalidated the Biden administration’s student debt relief plan. As the dissent in that case recognized, the principal questions doctrine already paved the way for courts to “invalidate broad delegations authorized by Congress because they will have a significant regulatory impact.” 143 S. Ct. at 2391 (Kagan, J., dissenting). Indeed, after West Virginia vs. EPAPlaintiffs have filed dozens of lawsuits across the country challenging laws on issues including “pipelines, asbestos, nuclear waste, corporate disclosure, and highway planning.” Loper LightThe impact will undoubtedly be greater because its reach is not limited to “important” issues.

Of course, even after Loper Lightmany courts will likely continue to rely on an agency’s expertise and experience in interpreting the statute that the agency is implementing. As the majority explained, courts may continue to consider the agency’s considered views (the so-called Skidmore deference), giving non-binding weight to the agency’s interpretation to the extent that it “is based on factual considerations within the agency’s area of ​​expertise”. However, Loper Light eliminates the “mechanical” deference by courts to agency interpretations when a statute is ambiguous, which generally makes it easier for courts to ignore or give little weight to agency views. For this reason, as the dissenting opinion noted, this ruling will almost certainly prompt many subsequent challenges to agency rules and actions, generating potentially inconsistent results as courts across the country grapple with ambiguous statutes.

Loper Light in this way it could be announced that the situation would return to the previous oneChevron a legal environment that encouraged a form of court-shopping to obtain favourable interpretations in highly regulated areas. For example, in Train vs. Natural Resources Defense Council, Inc.In 421 U.S. 60 (1975), five circuits reached three different views on whether a provision of the Clean Air Act permitted the EPA and states to reduce regulatory burdens on polluters. ID. at points 72–73. The Supreme Court expressed its frustration with these inconsistencies, which in its opinion only prove that there is no easy answer to the statutory question. Chevron, who quoted Train, was the cure for this problem because it created regulatory stability and uniformity. Loper Bright, federal lawsuits challenging regulations in a wide range of areas, from air and water quality to food and drug safety to employment standards to investor protection, could again find very different receptions in one appellate court compared with another. In turn, that could set off a race to the appellate court to issue the first ruling, in the hope that other courts will follow suit.

This Loper Light The separate vote also noted that the decision would almost certainly encourage renewed challenges to the principles and actions upheld by the courts during Chevronlong tenure. Although the majority rejected any suggestion that its ruling would overturn earlier decisions based on Chevron, courts whose “motivation is to invalidate the old Chevron“A decision based on the law can always accomplish something” that would justify departing from them, as Justice Kagan noted in her dissenting opinion.

Another decision this week has cast further doubt on whether the long-standing rules will be safe from scrutiny under the Bright’s loper. IN Corner Post vs. Federal Reserve603 U.S. ____ (2024), the Court held that a claim under the APA accrues when a plaintiff first becomes harmed, not when the regulation is initially promulgated. In that case, the Court held that the six-year statute of limitations for plaintiff companies challenging credit card interchange fees under the Federal Reserve Board regulation began to accrue when they first paid the fees, not earlier in 2011, when the regulation was promulgated. Because a newly incorporated company can now challenge virtually any regulation to which it is subject, there is effectively no longer a statute of limitations for such claims, Judge Jackson wrote in a dissenting opinion. Combined with Loper Light, Corner post creates the potential to effectively challenge not only new regulations, but also those already in force.