For 40 years, the "cornerstone of administrative law," Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), instructed federal courts to defer to federal agencies when they were interpreting ambiguities in the statutes they administer. In a 6-3 decision penned by Chief Justice Roberts, the Supreme Court has now overruled Chevron,in what is likely to be recognized as one of the most important cases of the 21st century. The case is Loper Bright Enterprises et al. v. Raimondo, Secretary of Commerce, et al., 603 U.S. ____ (2024) (argued with Relentless, Inc. et al. v. Department of Commerce, et al. (No. 22-1219)), a dispute over whether the National Marine Fisheries Service may require commercial fishing vessels in the north Atlantic to carry and pay for "one or more observers ... for the purpose of collecting data necessary for the conservation and management of the fishery," pursuant to the Magnuson-Stevens Fishery Conservation and Management Act. 1
The well-known Chevron test proceeded in two steps. At step one, a reviewing court discerned "whether Congress has directly spoken to the precise [interpretive] question at issue." 467 U.S. at 840. "If the intent of Congress [was] clear, that is the end of the matter," and the agency had no further interpretive discretion. Id. But, if a statute was "silent or ambiguous with respect to the specific issue," then step two said that a reviewing must defer to the agency if it offers a "reasonable construction of the statute." Id. In the years following the initial decision, the Supreme Court emphasized that Chevron rested on "a presumption that Congress, when it left ambiguity in a statute meant for implementation by an agency, understood that the ambiguity would be resolved, first and foremost, by the agency." Smiley v. Citibank (South Dakota), N.A., 517 U.S. 735, 740-41 (1996).
In Loper Bright, after the lower courts deferred to the National Marine Fisheries' interpretation of the Magnuson-Stevens Act under Chevron, the Supreme Court granted certiorari to resolve a single issue: "whether Chevron should be overruled or clarified." In its opinion, released on Friday, June 28, 2024, the Court first provided a detailed history of the Judiciary's "solemn duty" to interpret the laws of Congress, as envisioned by the Framers in Article III of the Constitution and remembered in the lasting declaration that "the province and duty of the judicial department [is] to say what the law is." Marbury v. Madison, 1 Cranch 137, 177 (1803). The Court's lookback also detailed how, "from the outset," federal courts have "recognized ... that exercising independent judgment often included according due respect to Executive Branch interpretations of federal statutes." While this was especially true during the "rapid expansion of the administrative process" during the New Deal era, the "very great respect" federal courts owed to agencies still did not yield to the independence of the Judiciary. In short, "[n]othing in the New Deal era or before," as the Court found, resembled the sweeping deference in Chevron.
The Court then examined how, in 1946, Congress enacted the Administrative Procedures Act (APA) as a "check" against mounting Executive Branch power. According to the Court, the APA underscored the "unremarkable, yet elemental" role of "reviewing court[s]," not Executive agencies, to "decide all relevant questions of law" and "interpret ... statutory provisions." 5 U.S.C. § 706. The plain language of the APA, in other words, "prescribes no deferential standard for courts to employ in answering legal questions," and "incorporates the traditional understanding of the judicial function, under which courts must exercise independent judgment in determining the meaning of statutory provisions." The Court also criticized the obvious inconsistency between the APA and Chevron (decided nearly 40 years after enactment of the APA), because the latter forces courts to "mechanically afford binding deference to agency interpretations, including those that have been inconsistent over time," and "even when a pre-existing judicial precedent" interprets the statute a different way.
Finding no way to reconcile itwith the APA, the Court struck down Chevron. Federal courts must now "exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the APA requires." While "interpretations issued contemporaneously with the statute at issue, and which have remained consistent over time," may be useful, they are not conclusive in "determining the statute's meaning." Skidmore v. Swift & Co., 323 U.S. 134, 140 (1941). Where a particular statute "delegates authority to an agency consistent with constitutional limits," courts will "respect the delegation, while ensuring that the agency acts within it." See NLRB v. Hearst Publications, Inc., 322 U.S. 111 (1944); Gray v. Powell, 314 U.S. 402 (1941).
In erecting this "new" standard from an amalgamation of former precedent, the Court markedly centralizes in the federal Judiciary a check against the exercise of regulatory authority—or, as some argue, the Court "gives itself exclusive power over every open issue, no matter how expertise-driven or policy-laden." Justice Kagan, writing for the dissent, argued that Chevron's demise marks the peak of "judicial hubris" and the rise of courts as "administrative czars." She also emphasized that courts are not "scientific or technical subject matter" experts, and do not face the same public accountability as Executive Branch agencies do through the President.
Conversely, the majority argued that federal courts, which "routinely ... handle technical statutory questions," are best equipped to find the "single, best meaning" of statutes, not "agencies [that] have no special competence in resolving statutory ambiguities." The Court also noted that litigants and amici are often "steeped" in the subject matter expertise that benefits reviewing courts.
The Loper Bright decision marks a fundamental shift in administrative law that will have wide-ranging impacts on regulated industries and future rulemakings. Agencies that once exercised broad influence over "the provision of health care, the protection of the environment, the safety of consumer products, the efficacy of transportation, and so on," will face a more stringent check by the federal Judiciary, reducing the flexibility they once had when rulemaking. Existing regulations and ongoing rulemaking processes may be subject to more litigation, including several rules promulgated by the Biden Administration. For example, business and industry groups are currently challenging the legality of the Federal Trade Commission's "non-compete" rule, amendments to the National Environmental Policy Act implementing regulations put forth by the Council on Environmental Quality and the Environmental Protection Agency's ambitious rules aimed at addressing climate change. Ultimately, Loper Bright offers new opportunity for these challengers to undercut agency construction of statutes, while cabining in future administrative rulemaking.
Footnote
1 The quoted material provided herein is from the Loper Bright decision unless a specific citation is otherwise provided.
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