On June 28, in a landmark case, the U.S. Supreme Court just overturned the 40-year old Chevron doctrine that dictated that courts must uphold a federal agency’s interpretation of a statute as long as it was reasonable. (See discussion of  Loper Bright Enterprises v. Raimondo and Relentless v. Department of Commerce below.) Under the Chevron doctrine, if an agency’s interpretation was a reasonable interpretation, the courts should give deference to it––even if the court would have read the statutory language differently.

Accordingly, the Chevron doctrine had given agencies broad authority to develop regulations, thereby making legal challenges to agency actions very difficult.

In Loper Bright, the Court ruled that deference to an agency’s interpretation of a statute under the Chevron doctrine was inconsistent with the Administrative Procedure Act (APA)—the statute detailing how federal regulations must be developed. Pursuant to the APA, the reviewing court must decide “all relevant questions of law” and must interpret statutory provisions. The ruling in Loper Bright directs courts to exercise independent judgement when interpreting law and makes clear that agency interpretations of statutes are not entitled to deference. It is now the responsibility of the court to decide whether the law means what the agency says.

The Supreme Court expressly rejected the argument that agencies are better suited to determine what ambiguities in a federal law may mean, particularly with respect to technical and scientific issues that fall within the agency’s area of expertise. The recent decision stated that Congress expects courts to handle technical statutory questions by relying on briefing from litigant and “friends of the court.” The Court did leave open the question that agencies would still be afforded deference on policy matters, but not on statutory interpretation. In addition, regulatory agencies will likely be afforded deference in interpreting their own regulations, provided it does not involve interpretations of statutes. These are areas likely to generate more litigation in the future. 

The Court’s decision did include some limits:

1) With regard to long-standing and contemporaneous interpretations of statutes, an agency will be afforded some respect, even with courts applying independent judgement regarding the statute. (This would likely include many policy matters.)

2) Going forward, Congress can give explicit delegation to an agency, and thereby, minimize any ambiguity in the statutory language.

3) Prior cases that upheld the Chevron doctrine will not be automatically overturned, but parties may be able to re-open cases provided that the timeframe for challenging a regulation is still valid.

4) The Court’s ruling would not directly apply to state regulatory actions, but some state courts are likely to follow the new decision—provided it is consistent with applicable state statutes.

The Supreme Court’s decision in Loper Bright is consistent with the U.S. Constitution’s separation of powers with Congress making the laws, the Executive branch implementing and enforcing the laws, and the Supreme Court interpreting the laws. Overturning the Chevron doctrine represents a major shift in how federal regulations will be promulgated. Agencies can no longer rely on any reasonable explanation to defend a regulation but must now be able to withstand challenges based on a court’s independent judgement in interpreting the statute, particularly the APA. This will provide the regulated community an opportunity to provide credible information as the basis for a regulation––and no longer be at the mercy of broad deference given to agencies.

Nevertheless, a flurry of litigation is very likely to occur in the near future as agencies try to adapt to the new regulatory paradigm. AFS will continue to provide members with information on new regulatory developments in the post-Chevron era and what it may mean for the metalcasting industry.