For forty years, the Chevron doctrine, established in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), has been a cornerstone of administrative law in the United States. Under the doctrine, if a court identified ambiguity in a statute, the agency that enforced the statute was permitted to “fill in the gaps,” so long as the agency’s interpretation was “permissible.” Chevron deference has been a powerful tool for federal agencies, tipping the scales in favor of an agency’s interpretation of ambiguous statutes the agency administers.
On June 28, the Supreme Court handed down its decision in Loper Bright Enterprises v. Raimondo and Relentless v. Department of Commerce, which overruled the Chevron doctrine, and held that courts must exercise their independent judgment when interpreting federal statutes and deciding whether an agency has acted within its statutory authority in the implementation of those statutes.
A corollary doctrine, established under Auer v. Robbins, 519 U.S. 452 (1997), instructs courts to defer to an agency’s interpretation of its own regulations, including non-binding agency memoranda and guidance documents. In 2019, the Supreme Court narrowed the circumstances under which Auer deference applied, but declined to overrule it. In order for Auer deference to apply, a regulation must be “genuinely ambiguous,” the agency’s interpretation must be reasonable, and deference is appropriate based on the “character and context” of the agency’s interpretation. The Loper Bright decision may further undermine Auer deference.
Although Loper Bright did not change anything procedurally under the Administrative Procedure Act (APA), now that the agency does not automatically receive the benefit of Chevron deference, we are likely to see an increase in the overall number of APA challenges to agency actions, and more likely success by the challengers. In addition to the obvious impacts to judicial review of agency action, we may also expect changes to how Congress writes statutes, and how agencies interpret them.
Agencies will have to provide more compelling justifications for their rulemaking decisions, given that courts will closely scrutinize their reasoning and interpretations. Agencies may also be more hesitant to stretch statutes beyond their natural bounds. Agencies may also be less likely to abruptly change positions in response to a new presidential administration.
Given the higher risk of legal challenges to agency rulemaking efforts, agencies may also further rely on their supervisory and enforcement powers, rather than rulemaking. Instead of seeking to develop and adopt new regulations or rules, agencies may shift to more regulation by enforcement. This could lead to greater regulatory uncertainty because companies and individuals will have to determine what is allowed not according to adopted regulations or rules, but the results of agency enforcement actions.
In the context of Indian law, the application of Chevron deference had been particularly nuanced and complex. Courts were split over which competing canon of construction controlled in Indian law cases: the Blackfeet or Indian canon (based on Montana v. Blackfeet Tribe, 471 U.S. 759 (1985), which construed statutes liberally in favor of Indian tribes, and ambiguous provisions were interpreted to the tribe’s benefit) or the Chevron canon. This judicial waffling underscored a recognition of the unique legal and historical context for Indian tribes and their relationships with the federal government. It may be that when the dust settles, the weakening of Chevron deference will not be as impactful in Indian country as it is in other areas of law.
We will closely track how the Biden administration interprets key Indian law statutes post-Loper Bright. In particular, we’ll watch for challenges to decisions based on the criteria the Department of the Interior issued last year for adjudicating tribal requests to have land taken into trust, with the presumption that land acquisitions will benefit tribal interests; and based on Interior’s 2022 M-Opinion that Section 5 of the Indian Gaming Regulatory Act and Section 1 of the Alaska Indian Reorganization Act authorize the Secretary of the Interior to take land into trust for Alaska tribes.
We will also monitor any additional challenges to the regulations that apply to government contractors, including Alaska Native Corporation and Tribal participation in the Small Business Administration’s 8(a), HUBZone, and other small business programs. The executive branch often uses its power over federal contracting to attempt through regulatory authority to implement social and political goals, such as increasing the minimum wage of federal contractors or requiring successor contracts to hire employees of an incumbent contract. Those efforts may be more susceptible to legal challenge post-Chevron.
Finally, although the majority opinion in Loper Bright emphasized that the overturning of Chevron “do[es] not call into question prior cases that relied on the Chevron framework,” the Supreme Court’s decision in Corner Post, Inc. v. Board of Governors of the Federal Reserve System, issued three days after Loper Bright, may provide an avenue for litigants to challenge regulations that were previously upheld based on the Chevron doctrine. In Corner Post, the Supreme Court held that any new entrant to a market has six years to challenge a regulation from the time it is authorized to sue. This means that companies just entering a new market can challenge existing regulations, regardless of when the regulations were adopted. Any such challenge would be brought in a post-Chevron landscape, and could result in court decisions that invalidate regulations previously upheld under Chevron.
