In a move long anticipated by many court watchers, the Supreme Court on June 28, 2024, jettisoned a longstanding doctrine of deference to federal agencies’ interpretations of the statutes they are charged to enforce. The Chevron doctrine, so named for the 1984 case in which it originated—Chevron v. Natural Resources Defense Council—said that courts should defer to “permissible” agency interpretations of the statutes those agencies administer—even when a reviewing court reads the statute differently. Naturally enough, federal agencies embraced this rule enthusiastically, playing it as a trump card when their interpretations, sometimes even those adopted simply as a litigating position in a single case, were challenged.
No more. In Loper Bright Enterprises v. Raimondo, the Supreme Court held that the Administrative Procedure Act (APA) requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority, and that they may not defer to an agency interpretation of the law simply because statutory language is claimed to be ambiguous.
The Loper Bright was a fishing boat, subject to regulation under the Magnuson-Stevens Fishery Conservation and Management Act (MSA). To carry out its mission of regulating fisheries, the National Marine Fisheries Service (NMFS) established pursuant to the Act decreed that fishing boats could be obliged to carry—at their own expense—one or more observers on board to ensure compliance. The NMFS initially capped fees for such observers at 2 or 3% of the value of the fish harvested. In 2013, however, they issued a new rule that required owners to pay up to $710/day for a government-selected observer to come aboard.
The owner of the Loper Bright challenged this new rule, which they said reduced their annual revenues by 20%. They argued that the MSA did not authorize NMFS to mandate that they pay for observers required by a fishery management plan. The district court granted summary judgment to the government, concluding that the MSA authorized the rule, and that even if the petitioners’ “arguments were enough to raise an ambiguity in the statutory text,” deference to the agency’s interpretation would be warranted under Chevron. A divided panel of the D.C. Circuit affirmed.
In a 6-3 opinion by Chief Justice Roberts, the Supreme Court reversed, finding that it is the exclusive province of the courts, not federal agencies, to say what the law is. Courts have at their disposal a wide range of interpretive tools. Agencies may have specialized expertise, but the U.S. Constitution places responsibility for interpreting laws squarely in the Article III courts. While agency interpretations may earn respect—and the battalions of lawyers they deploy to plead their cases are able advocates—they are not entitled to deference. Such deference is inconsistent with the requirements of the APA, which places responsibility for determining the meaning of statutes in the courts.
What does this mean for the regulated community? In the short term, this should change the defense strategy for anyone involved in ongoing litigation with any federal regulatory agency, such as the U.S. Department of Labor, though the Supreme Court took pains to say that its decision is not retroactive. In the long term, it raises the bar considerably for the government: no longer can government parties simply assert that a court must defer to their particular interpretation of a law or regulation. They will have to make their case and convince the court. It will be up to the advocates for each side, government and regulated entity, to persuade the court of the position they advocate.
What does this mean for regulatory agencies? It’s a game-changer, and may trigger a wholesale revision of the roles and constitution of the Administrative Law Judges (ALJs) and review boards housed within the various federal departments and agencies.
Along with the Court’s recent decisions in Starbucks v. McKinney and Jarkesy v. SEC, Loper Bright is sending a loud message to federal regulators to take care not to overstep the bounds Congress sets for them. Critics are calling these decisions a “power grab,” but others view them as leveling the playing field between the regulators and the regulated. In Starbucks, the Supreme Court told the National Labor Relations Board (NLRB) that it is subject to the same requirements as anyone else when it seeks an injunction to halt an alleged unfair labor practice, not preferential treatment. Jarkesy held that fines and penalties cannot be assessed by ALJs employed by the agencies (except the Occupational Safety and Health Administration (OSHA)) because that denies responding parties their Seventh Amendment right to a jury trial. And after Loper Bright, federal agencies can no longer assert a “because I said so” entitlement to deference for their views.
All three of these decisions signal a Supreme Court that is taking the separation of powers seriously, and holding the federal government to more stringent, constitutional standards than has been the case in recent years. It’s a severe rebuke to the excesses of the regulatory state. Stay tuned to see how the government comes to terms with these new rules of the road.
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