What Justices' Loper Bright Ruling Will Mean For Chevron

Originally published on Law360
The concept of administrative deference — i.e., that the courts should defer to relevant agencies' interpretations of ambiguous statutes they are tasked to administer — is a key component to the modern regulatory state.

An important aspect of administrative deference is the Chevron doctrine, which originated in the seminal 1984 U.S. Supreme Court case Chevron USA Inc. v. Natural Resources Defense Council.

The Chevron doctrine provides that when a statute is ambiguous — that is, when Congress has not spoken directly to the issue at hand — courts must defer to the relevant agency's interpretation, as long as the agency interpretation is reasonable.

But the Chevron doctrine has long been controversial — and scholars and observers have questioned for years whether the Supreme Court should, or would, overrule Chevron and reassert the judiciary's primary role in interpreting statutes.

On May 1, the Supreme Court agreed to hear Loper Bright Enterprises v. Raimondo, involving the National Marine Fisheries Service's interpretation provisions of the Magnuson-Stevens Act. The act requires certain fishing vessel operators to provide space onboard their vessels for federal observers tasked with ensuring compliance with various federal regulations.

In addition to providing space, the NMFS requires these vessel owners to pay the salaries of the observers. The petitioners, four family-operated herring fishing companies, argued that the act did not authorize the agency to impose these fees, and challenged the rule before the U.S. District Court for the District of Columbia.

Both the district court and the U.S. Court of Appeals for the District of Columbia Circuit applied Chevron, and found enough ambiguity in the statute to defer to the agency's interpretation. But Judge Justin Walker, writing in dissent to the D.C. Circuit's decision, noted that "if Congress had wanted to allow industry funding of at-sea monitors" related to Atlantic herring, it could have done so, but it "instead chose to expressly provide for it in only certain other contexts."

The fishermen accordingly sought review from the Supreme Court, who agreed to review only one question: Whether the court should overrule or "at least clarify that statutory silence concerning controversial powers" granted by a statute does not constitute statutory ambiguity.

Below, we will unpack why this question matters, and how it might be resolved by the high court. Options range from the court overturning Chevron entirely and making clear that agency legal interpretations are entitled to no deference whatsoever from reviewing courts, to — at the other end of the spectrum — letting the D.C. Circuit's decision stand, and letting Chevron continue as often ignored, but still technically authoritative, precedent.

Finally, we will discuss how parties interested in this dialogue can weigh in.

Chevron Deference in Context

Taking a detour to review how questions like this emerge is useful. Deference generally arises in the context of regulations promulgated under the federal Administrative Procedure Act.

Typically, statutes passed by Congress have provisions that are administered by federal agencies. The U.S. Environmental Protection Agency was the relevant agency in Chevron, and in last term's West Virginia v. EPA decision. Other examples include the U.S. Department of Health and Human Services — the agency involved in last term's decision in American Hospital Association v. Becerra — or the NMFS, as in Loper Bright. 

For formal regulations, agencies announce a proposal, accept comments from interested parties — written or otherwise — and promulgate a final rule that must be justified based on the information received during this process.

Once a rule is final, anyone who believes that they may be harmed by the regulatory action can challenge it in court within some prescribed period. Chevron comes into play when a party alleges that an agency did not have appropriate legal authority upon which to base the regulatory action.

These cases generally turn on the specific words Congress used in crafting legislation. While it may come as a surprise for some, several challenges often make it difficult to determine exactly what powers and responsibilities Congress has given to an agency:

  • Laws often broadly delegate authorities to administering agencies, due to perceptions that agencies' technical expertise is useful in implementing Congress' intended statutory scheme;
  • Laws frequently do not model linguistic coherence, because they result from political compromises necessary to secure a bill's passage; and
  • Laws do not automatically account for changes in knowledge or the existing regulatory environment.

These challenges set the stage for evaluating Chevron's continued validity. We will discuss each in turn.

Chevron and Technical Deference

Chevron originated in a case focused on how to interpret Clean Air Act provisions referring to stationary sources of pollution. While lower courts had adopted a fixed definition of "stationary source," on review, the Supreme Court found that the definition constituted a gap in the statute, where the EPA had discretion to define terms "in the context of
implementing policy decisions in a technical and complex arena." 

The court deferred to the agency's definition, reasoning that "[t]he fact that the agency has adopted different definitions in different contexts adds force to the argument that the definition itself is flexible, particularly since Congress has never indicated any disapproval of a flexible reading of the statute." 

Conflicting policies, the court found, required deference to agencies' decisions made in "detailed and reasoned fashion" related to complex and technical regulatory schemes. 

Chevron and Linguistic Imprecision 

After all the edits needed to pass a piece of legislation, the final text that makes in into law is not always completely clear, and at times may not even reflect Congress' original intentions. This difficulty was reflected in American Hospital Association v. Becerra, mentioned briefly above.

There, a divided panel of the D.C. Circuit noted a contradiction between the intentions of the reimbursement rate provisions of the Medicare Prescription Drug, Improvement, and Modernization Act — namely, to align the reimbursement rates more closely to the actual costs to hospitals — and the plain text of the statute, limiting the U.S. Department of Health and Human Services' ability to adjust rates. 

The majority of the panel found enough ambiguity to warrant deference to the agency under Chevron. The Supreme Court disagreed, and held that the statutory provisions at issue were straightforward. Notably, the Supreme Court did not even mention Chevron in its decision. 

That the Supreme Court and the D.C. Circuit — probably the two most experienced courts at statutory interpretation — reached different conclusions supports the concept that ambiguity is often in the eye of the beholder.

Chevron, Old Statutes and New Problems

A final puzzle the Supreme Court has struggled with in this space is how much leeway agencies get in reinterpreting old authority. 

West Virginia v. EPA — a decision from last term — dealt with the EPA's attempt to use the decades-old Clean Air Act to hasten a nationwide shift toward renewable energy. The court struck down an EPA rule, and provided what amounts to an antideferential canon for "major questions" of economic or political significance. 

In this, the court established an entire class of cases where Chevron does not apply, based on the practical impact of the regulation. It held that in cases where regulations will have significant economic or political ramifications, courts should not defer to federal agencies without some clear statement showing Congress intended to delegate a major question to the agency. 

Presumably, the fact that Loper Bright does not involve a major question may be one of the reasons the court chose it to evaluate whether the Chevron doctrine should continue to be used. 

Since West Virginia v. EPA, this point has been emphasized again by Justice Neil Gorsuch in his dissent last November from the denial of review in Buffington v. McDonough. There, Justice Gorsuch indicated that Chevron is now subject to various limitations, including major questions, and that the whole Chevron doctrine should be given "a tombstone no one can miss." 

What's Next

At some point next year, the Supreme Court is likely to decide Loper Bright in one of three

  • First, the court could dismiss Loper Bright as being improvidently granted, and allow
    the D.C. Circuit's decision upholding the regulation to stand.
  • Second, the court could overturn Chevron entirely, and invalidate the whole of the
    involved regulation.
  • Third, the court could apply a new standard that factors in the context in which an
    agency made a decision in evaluating the decision eventually reached by the agency.

Of these options, the second would generate the most regulatory uncertainty. Agencies arguably engage in gap-filling in countless statutes. But because only four justices have previously questioned the wisdom of Chevron, it is unlikely that the court will avail itself of this option. 

The court may, however, minimize uncertainty by providing further contextual limits on when and how administrative deference applies. At this point, the regulated community has an opportunity to weigh in by filing amicus briefs — directly, or through groups like trade associations — to help the court understand what outcome they would prefer.


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