In Major Ruling, US Supreme Court Overturns Chevron

07.02.2024

On Friday, June 28, 2024, the United States Supreme Court issued a ruling that overruled 40 years of judicial deference to federal executive administrative agencies and adopted an independent judgment standard. The ruling curtails the authority of federal agencies to interpret statutory ambiguities and reserves the constitutional role of statutory interpretation to the judiciary. This ruling overturns what has become known as “Chevron deference,” whereby courts defer to an agency’s interpretation of a statute when there is a question or dispute regarding the statute’s clear meaning.

This level of deference has been afforded to federal agencies since the landmark decision in Chevron v. Natural Resources Defense Council (1984). The Chevron case dealt with the Environmental Protection Agency’s (EPA) interpretation of a term in the Clean Air Act. To determine the meaning and intent of the language in the Act, the Court adopted a two-step test. First, the reviewing court determined whether the statute was ambiguous (i.e., whether Congress had defined or directly spoken to the precise question at issue in drafting the plain language of the statute. If such congressional intent was clear, then the court must give effect to the unambiguous expressed intent of Congress and reject any contrary agency interpretations. The inquiry would stop there. If, however, the statute was silent or ambiguous with respect to a specific term or issue, the court moved onto step two: in the case of ambiguity, the court must defer to an agency’s reasonable and permissive construction of the statute. In Chevron, the Court determined that the EPA’s interpretation of the Clean Air Act was permissive and “entitled to deference.” This framework—the “Chevron doctrine”—became the standard in cases involving statutory questions of agency authority.

The U.S. Supreme Court’s ruling in Loper Bright Enterprises v. Raimondo this past Friday has turned this doctrine on its head and signals the likely demise of Chevron deference.

On certiorari, the Court considered whether Chevron should be overturned or clarified, such question arising on appeal in Relentless v. Department of Commerce and Loper Bright Enterprises v. Raimondo. These cases challenged a rule issued by the National Marine Fisheries Service (NMFS), which required the herring industry to pay for costs associated with carrying observers aboard their vessels to collect data about their catches and monitor for overfishing. NMFS interpreted the Magnuson-Stevens Fishery Conservation and Management Act (MSA) to require herring fishermen to bear such costs. Petitioners challenged the rule under the MSA, 16 U.S.C. § 1855(f), which incorporates the Administrative Procedure Act (APA), 5 U.S.C. § 551 et seq. The District Court applied Chevron deference in these cases and found in favor of the NMFS. The D.C. Circuit and First Circuit each affirmed.

Considering only the question of whether Chevron should be overruled, the U.S Supreme Court determined that Chevron cannot be reconciled with the APA, which mandates that courts, not agencies, will decide “all relevant questions of law” arising on review of agency action (5 U.S.C. § 706). The APA thus requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority and does not allow deference to an agency interpretation in the face of statutory ambiguity.

Chief Justice Roberts delivered the opinion of the Court, emphasizing the plain meaning of the APA to direct courts to “decide legal questions by applying their own judgment.” The Chief Justice contended that “delegating ultimate interpretive authority to agencies is simply not necessary to ensure that the resolution of statutory ambiguities is well informed by subject matter expertise. The better presumption is therefore that Congress expects courts to do their ordinary job of interpreting statutes, with due respect for the views of the Executive Branch.”

Justice Kagan filed a dissenting opinion, joined by Justices Sotomayor and Jackson, opposing the majority’s overruling of Chevron and arguing that agencies have technical, scientific, and subject-matter expertise of regulatory laws and that courts should afford them deference.

This ruling significantly limits administrative authority and comports with the Court’s increasing trend towards rejecting agency claims of regulatory authority. Indeed, the Court’s overturning of Chevron comes on the heels of the Court’s adoption of the “major questions doctrine” in 2022, and marks a further erosion of executive administrative agency authority. As articulated in West Virginia v. EPA, 142 S. Ct. 2587, 2607–2608 (2022), the “major questions doctrine” applies in cases where an agency asserts authority concerning an issue of “economic and political significance.” In such cases, courts should “hesitate before concluding that Congress meant to confer such authority.” This translates to a restraint on administrative authority when the underlying claim of authority concerns an issue of “vast ‘economic and political significance,’” and Congress has not clearly empowered the agency with authority over the issue. See also Util. Air Regul. Grp. (UARG) v. EPA, 573 U.S. 302, 324 (2014).

The Court previously treated the major questions doctrine as somewhat of an exception to the Chevron doctrine, but its application has been unclear and inconsistent.

The recent ruling in Loper Bright Enterprises v. Raimondo, however, has definitively addressed the issue of how, or whether, Congress may grant agencies the authority to address major issues in the future that Congress did not anticipate when it enacted a statute. The answer is now clear: the courts must determine all major issues and ambiguities where there is a lack of clear congressional intent and may not defer to an agency’s interpretation or authority.

This signals a shift at the federal level towards allocating more authority in the judiciary when questions of legislative intent arise and is sure to have far-reaching impacts on industries—including environmental, water, and healthcare—that interface with federal agencies.

For California state courts, the decision does not change the way California courts review state agency determinations. California courts have their own set of principles for giving weight to state agency interpretations of state law. In California there are “two broad categories of factors relevant to a court’s assessment of the weight due an agency’s interpretation: those ‘indicating that the agency has a comparative interpretive advantage over the courts,’ and those ‘indicating that the interpretation in question is probably correct.’” Yamaha Corp. of America v. State Bd. of Equalization 19 Cal.4th 1, 12 (Cal 1998).