On June 28, 2024, the United States Supreme Court decided a case significantly changing judicial interpretation and review of federal administrative agency regulatory actions. In Loper Bright Enterprises v. Raimondo, (and the aptly-named companion case, The Relentless v. Raimondo) the Court held in a 6-3 decision that courts charged with interpreting ambiguous statutory provisions governing federal administrative agencies should no longer give presumptive deference to the agencies’ own interpretations, but rather the courts themselves should undertake the interpretation and enforcement of such regulations using generally-prevailing judicial standards of statutory interpretation. The Court explained that the previous practice calling for courts to defer to agency interpretations – known as “Chevron deference” after its earlier decision in Chevron v. Natural Resources Defense Council – of arguably-ambiguous regulatory authority is overruled. The Court now instead directs courts to interpret and clarify the ambiguities themselves using traditional judicial standards of interpretation.
Courts Are No Longer Bound to “Defer” to Agency Interpretations of Ambiguous Statutes.
The factual background of Loper Bright involves the National Marine Fisheries Service (NMFS), a federal agency which develops fishery management plans that are promulgated as final regulations. The plaintiffs are operators of commercial fishing vessels subject to such plans. The NMFS regulations in dispute involve requirements that an observer must be present on domestic fishing vessels in order to collect data for the conservation and management of the fishery. If NMFS determines that an observer is required to be present on a vessel, but declines to appoint a government-paid observer, then NMFS has interpreted its statutory authority to allow NMFS to require the domestic vessels to contract with a government certified third-party observer and to pay for the costs of the observer out-of-pocket. Plaintiffs challenged the agency’s interpretation that purported to confer broad authority to impose that requirement.
Prior to Loper Bright, the Court’s 1984 decision in Chevron v. Natural Resources Defense Council (“decided by a bare quorum of six Justices”) had been interpreted as requiring courts to defer to “permissible” agency interpretations of the statues those agencies administer – even when a reviewing court might read that statute differently. Chevron deference called for courts to conduct a two-step analysis. Step One was to determine if the statute was ambiguous. Congressional authority for, and limitations upon, agency action as reflected in statutory text was often found to be ambiguous and imprecise. If so, courts were then to proceed to Step Two: determining whether the Agency’s interpretation of the ambiguous term was ‘permissible.’ If so, courts were to defer to the Agency’s interpretation, based upon the assumption that Agency staff had more expertise in “the area” (i.e., the science and technical issues) covered by their regulations than the judiciary. The majority opinion in Loper-Bright by Chief Justice Roberts, however, pointed out that the courts have more expertise in the relevant “area” of statutory interpretation than agency bureaucrats.
The majority decision invoked constitutional “separation of powers” principles as well as its interpretation of the Administrative Procedures Act (APA) to support its conclusion that courts have primary responsibility for interpretation of congressional intentions. The majority explained that in its enactment of the APA, Congress made no mention of the Judiciary needing to give deference to Agency’s interpretations of the law. The majority found this omission to be significant, because the APA does require the Judiciary to afford deference to Agency’s factual determinations. Furthermore, the Court noted that the APA actually seems to require the exact opposite of deference to Agency’s interpretations of the law, instead requiring 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.”[1] The Court held it was not Congress’s intent to apply deference to un-elected agencies legal interpretations, but rather to respect the province of the Judiciary to discern and interpret statutory intent.
In Loper-Bright, the Court effectively over-ruled the former Chevron approach, and courts are no longer compelled to defer to the Agency’s interpretation of the law. Instead, courts should seek to use otherwise standard principles of statutory interpretation to ascertain and implement perceived Congressional intent.
Courts Will Now Merely Afford “Respect” to Executive Interpretations of the Law
Going forward, the Court indicated its interest in returning to affording only more limited “respect” to agency interpretations of the terms of a statute, such as that based upon framework described in its 1944 decision in Skidmore v. Swift. That decision had recognized that agency “interpretations and opinions based upon specialized knowledge and experience” provide “a body of experience and informed judgment” which courts could respect and look to for guidance. Accordingly, agency interpretations of the law may be poised to return to the status of being merely persuasive, rather than binding authority.
Cases Decided Based Upon Chevron Deference Remain Good Law, But May be Challenged
The Court explained that prior decisions that relied on the Chevron framework are not overruled or automatically called into question. Rather, such decisions remain on the books and subject to stare decisis despite the change in interpretive methodology. As Loper Bright itself shows, however, stare decisis is not a complete shield; all agency decisions which were upheld in cases relying upon Chevron deference are subject to challenge or reconsideration in future litigation.
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Should you have any questions regarding these changes to Agency Deference, please contact Dave Lanferman, Peter Howell, or Alan Fenstermacher.
This e-Alert is published periodically by Rutan & Tucker, LLP and should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only.
[1] 5 U.S.C. § 706.
