Earlier this month, the U.S. Supreme Court announced that during its next term it will hear a case that could overturn Chevron, U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984). Under Chevron, a court defers to agency interpretations of ambiguous statutes, as long as the judge finds the interpretation to be reasonable. If the court limits or upends the Chevron doctrine, the ruling would pull back the leeway that agencies have had in interpreting statutes. The case that the Supreme Court has acceptedLoper Bright Enterprises., Inc. v. Raimondo (“Loper”), 45 F.4th 359 (D.C. Cir. 2022), could result in the court overruling Chevron entirely or narrowing it significantly.
CHEVRON EXPLAINED
In Chevron, the Supreme Court upheld as reasonable a Reagan administration regulation that interpreted the Clean Air Act to allow the Environmental Protection Agency to define the term “stationary source” to mean whole industrial plants. Chevron established a highly deferential framework for courts to review agency interpretations of ambiguous statutes that the agency is charged with administering. Under Chevron, courts are instructed to perform a two-part analysis:
- First, a court must determine whether Congress has directly spoken to the precise question at issue. Chevron deference is only at play if Congress has granted the agency authority to act, and there is ambiguity in the relevant statute.
- Second, if the court finds ambiguity in the applicable statute, the agency interpretation receives deference as long as the actions are based on a “permissible construction” of the statute. Chevron, 467 U.S. at 843.
Even in cases where the Chevron framework does not apply—and perhaps if Chevron is overruled—a court may still give some weight to the agency’s interpretation of a statute to the extent it is persuasive. See Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944) (explaining that the weight afforded to an agency’s judgment “will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control”).
A DIRECT CHALLENGE TO CHEVRON IN LOPER
In granting certiorari in Loper, the Supreme Court made clear that it intends to use the case to consider the viability of Chevron. In this case, Loper Bright Enterprises, a herring fish company, is appealing a D.C. Circuit Court decision upholding, under Chevron, a National Marine Fisheries Service regulation requiring herring fishing boats to allow a federal observer onboard to oversee their operations and requiring that the fishing company compensate the observers for their time. The statute does not require the fishing boat operators to pay the costs for the observer, so this is a case where the agency is passing the cost of regulation onto the regulated entity in the absence of explicit statutory authority. The court granted certiorari to decide “Whether the Court should overrule Chevron or at least clarify that statutory silence concerning controversial powers expressly but narrowly granted elsewhere in the statute does not constitute an ambiguity requiring deference to the agency.” SeeLoper, 2023 WL 3158352.
COURT POISED TO REPUDIATE THE CHEVRON DOCTRINE
Several sitting Supreme Court justices have indicated a willingness to narrow or even strike down the Chevron doctrine. For example, Justice Clarence Thomas has written that Chevron rests on the “fiction that ambiguity in a statutory term is best construed as an implicit delegation of power to an administrative agency to determine the bounds of the law.” Cuozzo Speed Techs., LLC v. Lee, 579 U.S. 261, 286 (2016) (Thomas, J., concurring). Justice Brett Kavanaugh has criticized Chevron for encouraging administrative agencies to aggressively pursue policy goals unless “clearly forbidden” by statute. Brett Kavanaugh, Fixing Statutory Interpretation, 129 Harv. L. Rev. 2118, 2150 (2016). And in dissent to the court’s denial of certiorari in Buffington v. McDonough, 143 S. Ct. 14, 18–19 (2022) (Gorsuch, J., dissenting), Justice Neil Gorsuch opined that pursuant to the framework imposed by Chevron, “[r]ather than provide individuals with the best understanding of their rights and duties under law a neutral magistrate can muster, we outsource our interpretive responsibilities. Rather than say what the law is, we tell those who come before us to go ask a bureaucrat.” Other Supreme Court justices have also criticized the Chevron doctrine or taken the position that clear statements from Congress are required for major regulatory programs. Brownstein wrote about one example, regarding West Virginia v. EPA, 142 S. Ct. 2587 (2022) here. Another example includes Dep’t of Transp. v. Assoc. of American R.Rs., 575 U.S. 43, 61 (2015) (Alito, J., concurring).
POTENTIAL IMPLICATIONS OF A DECISION PULLING BACK CHEVRON
Chevron has been in place for almost 40 years and has been a linchpin of administrative law—governing how agencies promulgate rules and how courts review agency actions. Repudiating such a landmark precedent would encourage more challenges to agency interpretations of statutes even in situations where courts have previously upheld agency positions.
The Supreme Court’s decision to take up Loper likely indicates a changing landscape for agencies, Congress and the federal courts. Although much depends on the contours of the court’s decision, if Loper eliminates or narrows Chevron deference, some potential implications include:
- Agencies may find it more difficult to promulgate and defend regulations that go beyond explicit statutory authority and new administrations may hesitate to alter interpretations of governing statutes, except to the extent that they can argue that previous interpretations based on Chevron deference should be altered in favor of interpretations that hew more closely to statutory text. Within agencies, we might also see an increase in the influence of the general counsel’s office over policy offices when it comes to developing regulatory programs, as agencies anticipate judicial review of their interpretations based on legal rules of statutory interpretation that will be most convincing to judges.
- Congress will face more pressure to clearly articulate agency authority and delegate fewer details to administrative agencies. Looking at the political reality, Members of Congress may no longer be able to rely on party-aligned executive and independent agencies to engage in policymaking that conforms to political priorities if those priorities have not first been passed into law, or, avoid political debate by pushing agencies to instead address certain questions.
- Courts may see an increase in their dockets as potential parties anticipate a greater chance of success from litigation challenging agency statutory interpretations. Judges may face increased scrutiny of their decisions and pressure to justify their construction of statutes as impartial interpretations of legislation rather than based on their own policy preferences.
In at least some agencies, uncertainty over the future of Chevron has already resulted in the agencies relying less on expected judicial deference in formulating and defending their interpretations of statutory authority. In a post-Chevron world, agencies will have to defend interpretations as a persuasive interpretation of a statute, rather than just a permissible construction of ambiguous language or appropriate agency action in the face of congressional silence. We expect the decision in Loper to constrain agencies and place more pressure on Congress and the courts.
This case is worth continuing to follow for any entity subject to federal regulation. The extent to which the court uses this case to eliminate or cabin Chevron deference will undoubtedly affect future challenges to agency statutory interpretation and the development and implementation of future regulatory programs.
This document is intended to provide you with general information regarding Loper Bright Enterprises, Inc. v. Raimondo. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.