Key Takeaways

  • The U.S. Supreme Court on Friday overturned what it called the Chevron test, a principle that had required courts to defer to government agencies' expertise when laws were ambiguous.
  • "Agencies have no special competence in resolving statutory ambiguities. Courts do," Chief Justice John Roberts wrote in the majority opinion.
  • The ruling marks a major shift for numerous federal agencies and the industries they regulate. The court's 1984 decision in Chevron v. Natural Resources Defense Council was one of the most influential rulings in recent decades.

Deep Dive

In a 6-3 ruling in Loper Bright Enterprises v. Raimondo, the U.S. Supreme Court held that courts need not defer to federal agencies' interpretations of the law merely because the statutes they enforce contain gaps or ambiguities.

The dispute involved two related cases centered on a National Marine Fisheries Service rule requiring businesses to pay for federal observers aboard their fishing vessels to curb overfishing. The agency argued the costs should be borne by the businesses.

At the heart of the issue was the Chevron principle, which stipulated that when statutory provisions contain gaps or ambiguities, deference should be given to agencies as long as their interpretation is reasonable.

"Chevron is overruled," Chief Justice Roberts wrote in the opinion for the majority, adding that the deference it required is irreconcilable with the Administrative Procedure Act. The court's five other conservative justices joined Roberts's opinion.

The ruling reversed two lower court decisions that had left the decision on whether the government or businesses should pay for observers to the National Marine Fisheries Service.

In a dissenting opinion, Justice Elena Kagan noted that judges are not scientific or technical experts and that agencies often possess knowledge about regulatory subjects that courts cannot imagine.

"The majority has turned itself into the country's administrative czar," she wrote, noting that the ruling empowers courts to make policy decisions on numerous issues such as climate change and workplace safety.

"The Supreme Court's ruling opens the floodgates to litigation that will erode critical protections for people and the environment," Meredith Moore, director of the fish conservation program at the Ocean Conservancy, said in a statement.

However, Daniel Wolf, who leads the administrative law litigation team at Crowell and Moring in Washington, D.C., told Legal Dive that the Supreme Court's ruling does not mean the end of the administrative state.

"It clearly affects the degree of deference federal agencies get from federal courts, but it's not the end of democracy because Chevron deference is gone," Wolf said. "They (agencies) can still regulate. They just have to act within their statutory authority."

Wolf said the business community would welcome the ruling, but added: "We may not necessarily get fewer regulations—just better ones."

He also noted that the court had already somewhat curtailed agency power. Similarly, Chief Justice Roberts pointed out that since 2016, the Supreme Court had not deferred to agency interpretations under the Chevron principle. However, over the past 40 years, the ruling had been cited at least 17,000 times in lower courts.

Michael Drysdale, an environmental lawyer at Dorsey and Whitney, said the ruling's significance should not be underestimated given its impact on the scope of agency regulatory authority. "The Supreme Court issued some more attention-grabbing rulings at the end of its term, but the most far-reaching may be Loper Bright Enterprises v. Raimondo," Drysdale said.

In the labor and employment law field, Rachel See, senior counsel at Seyfarth Shaw LLP, acknowledged that "the demise of Chevron deference is a big deal, and the ruling upends a very complex body of law."

But for labor lawyers considering how the ruling will change the National Labor Relations Board (NLRB) and the Equal Employment Opportunity Commission (EEOC), See said: "In short, courts have not previously given Chevron deference to the EEOC or the NLRB."

The ruling came just 24 hours after the Supreme Court struck down the SEC's in-house adjudication of civil fraud penalties in SEC v. Jarkesy. Justice Kagan quickly pointed out the connection at the end of her dissent, writing: "It is hard to pretend today's decision is an isolated event." She went on to call Loper "another example of the Court's determination to weaken agency power, despite Congress's contrary instructions."