Supreme Court’s Chevron Decision: Major Implications for Businesses on Regulatory Interpretations

“The deference that Chevron requires of courts reviewing agency action cannot be squared with the [Administrative Procedures Act].”[1]

The Administrative Procedures Act[2] (the “APA”) is a federal law that outlines the procedures that federal agencies must follow and provides federal courts with guidelines for reviewing the actions of these agencies. In a highly anticipated decision, authored by Chief Justice John Roberts,[3] the United States Supreme Court has overruled the doctrine articulated by Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.[4] which ultimately became the leading case on the judiciary’s role in reviewing agency regulations under the APA.

Under the so-called “Chevron two-step,” federal courts have been required to defer to an agency’s interpretation of the statute the agency administers when the statute is “ambiguous,” even when the court disagrees with the agency’s interpretation.[5]

This represented, however, “a marked departure from the traditional approach.”[6] Rather, as noted in this week’s opinion, from the time of the inception of our union, it has been foundational that “it is emphatically the province and duty of the judicial department to say what the law is.”[7] According to the Court, this traditional framework is in fact codified by the APA, but was turned on its head by the Chevron doctrine. Chief Justice Roberts wrote that the APA requires “courts [to] decide legal questions by applying their own judgment.”[8]

Proponents of Chevron and its progeny have long maintained that the doctrine is valuable because it allows for statutes to be interpreted by experts in what are often highly technical fields.[9] The Loper Bright decision, however, does not mean that Courts cannot be guided by the interpretation of federal agencies or other experts.[10] In fact, the Court noted that while “[c]ourts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority . . . [c]areful attention to the judgment of the Executive Branch may help inform that inquiry.”[11] The decision also does not mean that federal agencies will never be given deference by the judicial branch. Rather, it means that in order to be entitled to such deference, congressional intent to give the agency that authority must be clear.[12]

Finally, the Court rejected the notions that Chevron should be upheld based upon stare decisis principles and that overruling the doctrine will negatively impact the ability of the law to develop uniformly.[13] The Court also emphasized that in its view, “there is little value in imposing a uniform interpretation of a statute if that interpretation is wrong. We see no reason to presume that Congress prefers uniformity for uniformity’s sake over the correct interpretation of the laws it enacts.”[14] And while the Court overruled the Chevron doctrine, Chief Justice Roberts was careful to clarify that prior cases that relied on the Chevron framework were not overruled per se.[15]

Under this revised framework, when agency rules and decisions are challenged in court, judges will employ the rules of statutory interpretation to determine the “best” reading of the statute. They must exercise their independent judgment when determining the meaning of statutory provisions, but they are not precluded from seeking aid from the interpretations of experts or agencies that are responsible for implementing the statutes.

In the wake of this impactful Supreme Court decision, Dinsmore attorneys will be closely monitoring the issue and keeping our clients, particularly those who operate in heavily regulated industries, up to date on new developments.