Dive brief:
- The Supreme Court on Friday struck down its so-called Chevron test that gave deference to a government agency’s experience when a law is ambiguous.
- “Agencies do not have special jurisdiction to resolve statutory ambiguities. Courts do,” Chief Justice John Roberts wrote for the majority.
- The ruling represents a sea change for a wide range of agencies along with the industries they regulate. The Court’s 1984 ruling in Chevron v. Natural Resources Defense Council it had been one of the most influential decisions of recent decades.
Diving knowledge:
The decisive 6-3 decision of the Supreme Court Loper Bright Enterprises v. Raimondo find that courts should not defer to a federal agency’s interpretation of the law simply because the statute governing the agency may be flawed or unclear.
The dispute involved a pair of cases involving a National Marine Fisheries Service rule that required companies to pay the costs of hosting federal agents on their vessels to curb overfishing. The agency said companies should bear the costs.
At the heart of the issue was the Chevron test, which stated that whenever a statutory provision is silent or ambiguous, deference should be given to the agency’s interpretation whenever it is reasonable.
Writing for the majority, Chief Justice Roberts said, “Chevron has proved itself fundamentally wrong.” He added that the agency deference required by Chevron cannot be squared with the Administrative Procedure Act. The other five conservative members of the Court joined the Chief Justice’s opinion.
The decision overturns a pair of lower court rulings that had left the decision on whether the government or companies should pay the cost of the monitors to the National Marine Fisheries Service.
Writing for the dissent, Justice Elena Kagan noted that judges are not scientific or technical experts and that agencies often know things about the subject matter of a statute that courts could not dream of.
“The majority has become the administrative czar of the country,” he wrote, noting that the decision gives the courts the power to make policy calls on issues such as climate change, workplace safety and many others.
“The Supreme Court’s decision opens the floodgates to litigation that will erode critical protections for people and the environment,” Ocean Conservancy Fish Conservation Program Director Meredith Moore said in a statement.
But Daniel Wolff, who heads the administrative law litigation team at Crowell and Moring in Washington, DC, told Legal Dive that the Supreme Court ruling does not mean the end of the administrative state.
“Obviously it affects the amount of deference agencies will get from the federal courts, but it’s not like democracy ends because we don’t have deference from Chevron,” Wolff said. “They [agencies] can still be regulated. They must only do so within the limits of their legal authority.”
Wolff said the business community will welcome the ruling, but added, “We won’t necessarily have less regulation — just better regulations.”
He also noted that courts had already curtailed the agency’s authority to some extent. Along similar lines, Chief Justice Roberts noted that the Supreme Court had not deferred to an agency’s interpretation under Chevron since 2016. Yet the decision has been cited at least 17,000 times in lower courts during the last 40 years.
Environmental lawyer Michael Drysdale of Dorsey and Whitney suggested the impact of the ruling cannot be overstated for what it means for the reach of the agency’s regulatory authority. “There were sexier decisions issued late in the Supreme Court’s term, but the one with the most far-reaching implications may be Loper Bright Enterprises v. Raimondo,” Drysdale said.
Regarding labor and employment law, Seyfarth Shaw LLP Senior Counsel Rachel See acknowledged that “the death of Chevron deference is a big deal and the The decision changes a very complex body of law.”
But for labor and employment lawyers contemplating how the NLRB and EEOC will change as a result of this decision, See said, “The short answer is that the courts have not given Chevron deference to the EEOC or NLRB in the first place.” .
The ruling was overturned just 24 hours after the Supreme Court overturned the Securities and Exchange Commission’s internal system for deciding civil fraud penalties in SEC v. Jarkesy. It’s a connection Justice Kagan was quick to make at the end of her written dissent: “It’s impossible to pretend that today’s decision is unique.” He went on to call Loper “another example of the Court’s decision to roll back agency authority, despite Congress saying otherwise.”
