Understanding Loper: The Grandfather Clause

Hundreds of previous federal cases have hinged on Chevron. They remain good law.

To ease the shock of abandonment ChevronThe Supreme Court created a safe harbor for prior court decisions. It was well thought out. The Court itself has applied Chevron at least seventy times, as have thousands of lower court decisions. The key question will be the scope of the grandfather clause.

The Court’s discussion began with the statement that “we do not dispute the earlier cases in which Chevron “Thus, “the rulings in those cases that found specific agency actions were lawful—including the ruling in the Clean Air Act Chevron they are still subject to statutory provisions in themselves stare decisis (Latin: upholding past decisions) despite our change in interpretive methodology.” “This means that simply relying on Chevron cannot constitute a “special justification” for setting aside such a judgment, since the statement that the precedent referred to Chevron is at best “merely an argument that the precedent was wrongly decided.” And “It is not sufficient to justify setting aside the statutory precedent.”

It seems clear that a particular provision that has been upheld by an earlier decision is protected by that earlier decision. So the idea that invalidation Chevron opens the season on existing laws is an exaggeration, since many of those laws are protected by binding precedent. The next question is the scope of protection for a given agency. The court begins by referring to specific laws, but then speaks more broadly to statutory stare decisis (precedent).

It is significant that the Court referred to statutory stare decisis, because as a general rule, cases interpreting statutes are particularly difficult to overturn. Unlike a constitutional decision, a case interpreting a statute can be overturned by Congress passing new law. Therefore, there is less need for courts to correct errors in statutory precedents. This means that overturning Chevron-era cases will be very difficult.

What happens if the regulation that was upheld is Chevron be changed later? If the features of the regulation that were challenged in the prior case remain unchanged, that should mean that the validity of those features is still binding law. Presumably the same should hold true even if the agency repeals the prior regulation and replaces it with a new regulation that preserves those features. The innovations in the new regulation may be subject to attack, but stare decisis (respect for precedent) should protect the features inherited from the prior regulation.

For example, the Environmental Protection Agency issued interstate pollution regulations that were based on an earlier Supreme Court decision titled EME HomerLess than a week ago DrifterThe court stayed this decision for other reasons, but there was no mention of this anywhere in the opinion. EME Homer there was no doubt.

There is talk of an increase in the number of lawsuits challenging the provisions that were upheld under Chevron. The Court seems to be trying to close the door on such challenges. To do otherwise would throw many areas of regulation into disarray, with devastating consequences for all who have relied on these decisions—investors, agency officials, states, and Congress itself. There will undoubtedly be a few rogue judges—likely on the Fifth Circuit—who will ignore the Court’s directives. They will deserve a summary decision from the Supreme Court.

Tomorrow: A Sheep in Wolf’s Clothing?