Supreme Court Overrules Chevron

Supreme Court Overrules Chevron

In Loper Bright Enterprises v. Raimondo, the Supreme Court overruled Chevron U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984) in a case that will have far-reaching implications for the federal administrative state.  In doing so, the majority invoked Marbury v. Madison’s pronouncement that it is “emphatically the province and duty of the judicial department to say what the law is.”  As far as the rationale, the Court concluded that Chevron violated the Administrative Procedure Act (APA) and stare decisis could not justify adhering to the 40-year precedent.

The case, along with its companion case, Relentless v. Department of Commerce, (Justice Jackson did not take part in the Loper Bright case), presented an interpretation of the Magnuson-Stevens Fishery Conservation and Management Act (MSA).  The MSA requires the regional fishery councils to establish plans for fishery conservation and management goals to ensure that overfishing does not occur by commercial fisheries.  Under the MSA the fishery councils may require “one or more observers be carried on board domestic vessels for the purpose of collecting data necessary for the conservation and management of the fishery.”  The statute is silent as to whether the Atlantic herring fishing companies must bear the costs associated with a federal observer on board.  The regional councils developed a rule indicating that the fishing companies must pay for the observers if federal funding was unavailable.  The cost associated with having the federal observer on board was up to $710 per day, which could reduce the annual revenue by up to 20%.

Nobody disputes that the law requires the observers on board, the issue in the case was who was to pay for the observers.  The Atlantic herring fisheries challenged the rule. The D.C. Circuit relied on Chevron to uphold the rule, concluding the MSA was not “wholly unambiguous” and because there was “some question” as to what Congress intended, the court deferred to the agency’s reasonable interpretation.  Under Chevron, courts were directed to first determine if the statute reflected a clear congressional intent.  If it did, then that would end the inquiry.  But, if the statute was silent or ambiguous, Chevron required courts to “defer to the agency’s interpretation if it is based on a permissible construction of the statute.”

In a 6-3 decision authored by Chief Justice Roberts, the Court reversed the D.C. Circuit and expressly overruled Chevron, concluding that under Section 706 of the APA, Congress directed that “[t]o the extent necessary to decision and when presented, 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 concluded that the APA codifies the “unremarkable, yet elemental proposition reflected by judicial practice dating back to Marbury: that courts decide legal questions by applying their own judgment.”  Thus, even if the law is ambiguous, there is still a “best” reading of the statute – “the reading the court would have reached if no agency were involved”- and courts are required to interpret the law and not defer to agencies.  Under the APA, Congress did not codify a deferential standard for agency review.

The Court explained historical practice dating back to the founding and Marbury supported its conclusion.  That historical practice included “according due respect to the Executive Branch interpretations of federal statutes” but the Court noted that “respect” “was just that” and courts must still exercise independent judgement to interpret statutes.

While courts have the responsibility to decide what the law means, courts may still “seek aid” from agencies who are responsible for implementing statutes.  The Court noted that contemporaneous agency interpretations which have remained consistent over time “may be especially useful” in interpretating a statute’s meaning.  Presumably this would be contrasted with agency regulations that change from administration to administration based on the policy preferences of the executive.  The Court also explained that in some instances, Congress may have expressly delegated to the agency authority to give meaning to a particular statutory term or to “fill up the details.”  This may be true where Congress uses terms such as “appropriate” or “reasonable.”  But, where such delegation occurs, courts are still required to exercise independent judgment in interpreting the statute to ensure the agency is exercising that delegated authority within the appropriate boundaries that Congress has prescribed.

The Court rejected the government’s and dissent’s arguments that courts should defer to agencies due to their subject matter expertise and because it promotes uniformity in the law.  The Court noted that under Skidmore, agencies still have the “power to persuade.”  As for uniformity, “there is little value in imposing a uniform interpretation of a statute if that interpretation is wrong.”

Finally, the Court concluded that stare decisis did not support adhering to Chevron as the factors, including the quality of the reasoning, the workability, and the reliance interests, all weighed in favor of overruling Chevron. In overruling Chevron, the Court recognized that hundreds of decisions have relied on the decision in the last 40 years.  And the Court did not call into question any of those cases that relied on Chevron. 

Justice Thomas concurred in the decision but would have gone farther to conclude that Chevron violated the Constitution’s separation of powers.

Justice Kagan authored the dissent arguing that the Chevron framework correctly reflected Congress’ intent for courts to defer to agencies to fill in statutory gaps and ambiguities in statutes as they have technical expertise in a particular area.  The dissent provided several technical examples of regulatory schemes that courts, in the dissent’s view, should defer to, but now will be in the business of deciding for themselves including: “When does an alpha amino acid polymer qualify as such a ‘protein’” under the Public Health Service Act, which is regulated by the FDA?  Or “[m]ust the [Fish and Wildlife] Service treat the Washington State population of western gray squirrels as ‘distinct’” under the Endangered Species Act?  Or “[h]ow much noise is consistent with ‘the natural quiet’” in order to adhere to Congress’ directive to the Department of the Interior and the Federal Aviation Administration to reduce noise from aircraft flying over the Grand Canyon?   According to Justice Kagan, “agencies often know things about a statute’s subject matter that courts could not hope to” particularly when the statute is “scientific or technical nature.”  And, according to the dissent, many of these questions are ones of policy, rather than law, which means courts should not be deciding them.

What this decision will mean for local governments is not certain yet.  There are many circumstances where courts being more willing to strike down agency regulations will benefit local governments as regulated entities.  But there are other times that striking down a regulation will hurt local governments.  And still others where the issue will cut both ways for local governments depending on local politics and community priorities.

Overruling Chevron also may create some uniformity pluses and minuses.  On the one hand, overruling Chevron may mean that there is less regulatory flip-flopping between different presidential administrations over agency regulations because courts will be in the business of deciding what a particular statute means, not the agency with a new policy agenda.  We have seen this flip flopping from administration to administration with WOTUS definitions and the changes create regulatory uncertainty.  Thus, overruling Chevron may create more consistency and may force Congress to write with more clarity, which would ultimately be beneficial to regulated entities. On the other hand, judicial interpretations of statutes may vary based on geography so rather than having a single uniform rule issued by the agency, local governments under different federal courts may be subject to different interpretations of a statute that regulates them. To be fair, this could have happened under Chevron too if different courts disagreed as to the ambiguity in a statute, though it would seem to be less common.

What is clear is overruling Chevron means a smaller administrative state and less agency power.  It also likely means there will be more challenges to agency regulations and courts are more likely to strike down those regulations.  If local governments want to challenge a regulation in court, they will have more ammunition to do so without the specter of Chevron tilting the scales in the agency’s favor.  And hopefully Congress will draft statutes with less ambiguity going forward which would benefit everyone.

To read the decision, click here.