Key Takeaways
- Recent SCOTUS decision ending Chevron deference limits federal agencies’ ability to interpret statutes and hands more power to the federal courts.
- Widespread implications to the decision are expected, including more challenges to agency regulations as well as more robust agency arguments in future cases.
- The impact on New York law remains to be seen, as New York courts defer less to agencies’ interpretation than the federal courts.
Introduction
Chevron is out of gas. For the past 40 years, Chevron U.S.A. v. Natural Resources Defense Council (Chevron), was the seminal case of administrative law holding that federal courts defer to agency’s interpretations of “ambiguous” statutes. On June 28, 2024, the U.S. Supreme Court (the Court or SCOTUS) overruled Chevron in handing down its decision Loper Bright Enterprises v. Raimondo and Relentless v. Department of Commerce.
The end of Chevron deference is arguably equally historic as some other recent SCOTUS decisions, and it will have lasting impacts on both how Congress writes laws and how federal agencies interpret laws. This change will affect anyone who deals with a federal administrative agency — a nearly limitless group.
Chevron Explained
In 1984, SCOTUS ruled in Chevron that courts must defer to federal agencies’ reasonable interpretations of ambiguous federal statutes. Specifically, Chevron provided a two-step interpretation methodology for courts to use in cases where a litigant challenges the validity of regulation promulgated by a federal agency. These steps were outlined by the Court as follows:
- The Court asks whether Congress clearly addressed the issue or whether the statute on which the agency based its regulation is silent or ambiguous as to the issue.
- If Congress did not clearly address the issue, and the statute is ambiguous, then it asks whether the agency’s interpretation of the statute is “reasonable.”
Applying Chevron, if the interpretation is reasonable, then a court defers to the agency’s interpretation of the statute.
Chevron gave federal agencies broad leeway to interpret and promulgate sweeping regulations in the context of “ambiguous” statutory language. The prevailing rationale behind Chevron was that courts cannot be experts on every issue that federal agencies address and regulate. Chevron supported the claim that ambiguous statutory language was an implicit delegation of authority from Congress to federal agencies to promulgate regulations as they saw fit based upon their institutional expertise. The decision in Loper Bright, however, rejects this idea and reclaims the role of the judiciary in statutory interpretation.
Background & SCOTUS Decision
Loper Bright Enterprises (Loper Bright), a group of New England fishermen, challenged a regulation promulgated by the National Marine Fisheries Service (NMFS) requiring fishing vessels to pay for the posting of observers on their boats to monitor their fishing activities. Loper Bright argued that this regulation exceeded the authority granted to NMFS through the Magnuson-Stevens Act (MSA), which regulates commercial fishing in the United States. The regulations were upheld by the lower courts, applying Chevron deference.
In a 6-3 decision authored by Chief Justice John Roberts, the Court then overruled Chevron, holding that courts “must exercise their independent judgment in deciding whether an agency has acted within its statutory authority” and “may not defer to an agency’s interpretation of the law simply because a statute is ambiguous.”
The Court’s reasoning relied on Article III of the Constitution and the language of the Administrative Procedure Act (APA). The Court began by discussing how Article III reserves to the judiciary the responsibility to adjudicate cases. Additionally, the Court looked to precedent where courts exercised independent judgment in statutory interpretation, including the seminal case of Marbury v. Madison and the words of Chief Justice Marshall — “it is emphatically the province and duty of the judicial department to say what the law is.”
The Court then focused on the language in and rationale of the APA. The APA was adopted as a check against over-zealous administrative agencies that might seek to extend their reach beyond those duties specifically delegated to them. Additionally, the APA expressly provides that “the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action.”
The Court held that Chevron deference is inconsistent with the longstanding jurisprudential principle confirmed in the APA “that courts decide legal questions by applying their own judgment.” Therefore, courts are not to surrender their responsibility to interpret statutes and defer to agency interpretations of statutes.
The Court expressly rejected the government’s argument that an agency’s specialized expertise warrants deference. “Chevron’s presumption is misguided because agencies have no special competence in resolving statutory ambiguities. Courts do. The Framers, as noted, anticipated that courts would often confront statutory ambiguities and expected that courts would resolve them by exercising independent legal judgment.”
While the Court discarded Chevron deference, the Loper Bright decision appears to endorse a prior standard set forth in the 1944 case Skidmore v. Swift. Courts may still extend Skidmore deference, which gives agency interpretations of ambiguous statutes “respect” but does not bind the Court to automatically defer to the agency interpretation, even where, as was the case under Chevron, the Court would, upon independent examination, reach a different conclusion.
Implications of Loper Bright
Loper Bright will have lasting implications on administrative law and agency rulemaking for decades to come. Some implications include:
- Federal agencies’ power to promulgate powerful regulations that interpret “ambiguous” statutory language will be limited.
- Agencies will need to provide more robust and compelling arguments for their regulations. Under Chevron, agencies enjoyed a leg up in any legal challenge to regulations and they had routinely argued that their regulations were reasonable interpretations of ambiguous statutory language and relied on Chevron deference to validate their policy choices and drafting.
- There will likely be an exponential increase in challenges to agency regulations by businesses and any regulated industry. While the Court expressly noted that the Loper Bright opinion does not overturn prior precedents decided in reliance on Chevron deference, holding that those decisions are entitled to statutory stare decisis despite the Court’s change in interpretive methodology, now, agencies may be far less likely to push the limits of their statutory authority because of the judiciary’s renewed role at the center of statutory interpretation.
Overall, the Loper Bright decision weakens the power of federal administrative agencies to promulgate sweeping regulations and opens up agencies to more frequent and vigorous legal challenges.
New York’s Rule
While Loper Bright impacts federal cases and federal agencies, it remains to be seen what effect this decision will have on New York law. New York has traditionally applied a rule that grants agencies far less deference than Chevron. In New York, courts defer to an agency’s statutory interpretation “when the interpretation involves some type of specialized knowledge.” Belmonte v. Snashall, 2 N.Y.3d 560, 813 N.E.2d 621, 624 (N.Y. 2004). New York courts do not simply defer to an agency interpretation when a statute is merely “ambiguous,” as in Chevron. Instead, the Belmonte court notes “where the question is one of pure statutory reading and analysis, dependent only on an accurate apprehension of legislative intent, there is little basis to rely on any special competence or expertise of the administrative agency. In such circumstances, the judiciary need not accord any deference to the agency’s determination, and is free to ascertain the proper interpretation from the statutory language and legislative intent.”
Conclusion
When Chevron was first decided, most legal scholars did not view it as a particularly salient case, but it became arguably the most important administrative law precedent over the last 40 years. The end of Chevron deference represents a tectonic shift that will greatly impact the ability of federal agencies to promulgate regulations, change the way Congress drafts statutes, increase the judiciary’s oversight of administrative agencies, and lead to a potential tsunami of legal challenges to agency actions across countless industries. Its impacts are expected to be felt for decades to come. Our multidisciplinary team will continue to monitor any new implications or developments related to this case.
This alert was prepared with the assistance of Matt Kilduff, Tarter Krinsky & Drogin Law Clerk and 2L at Vanderbilt Law School.
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