On June 28th, the U.S. Supreme Court made a landmark decision with a 6-3 vote in the cases of Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce: the justices overturned the pivotal legal precedent set by Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. in 1984. This decision diminishes the power of federal agencies with the potential to reshape the landscape of U.S. administrative law and governance.
The overturned precedent, known as “Chevron deference,” essentially allowed judges to defer to an agency’s interpretation of ambiguous laws. This gave agencies significant leeway in creating and enforcing regulations. However, the Supreme Court’s recent ruling shifts more interpretative power to the judiciary. Chief Justice John Roberts stated, ” Chevron is overruled. Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the [Administrative Procedure Act (APA)] requires.”
The Role of Administrative Agencies
It is well known that the three branches of government in the United States are 1) Congress, which legislates; 2) the executive branch, which enforces; and 3) the judicial branch, which interprets. Administrative agencies, often referred to as the “fourth branch” of government, play a crucial role by crafting detailed regulations under the authority of broader legislative mandates. For instance, the FDA regulates food and drug safety under various laws to protect consumers.
These agencies have often been criticized for potentially overstepping the constitutional separation of powers, as they create, interpret, and enforce rules within one organ. Nevertheless, their role is vital in today’s American society, affecting everything from financial markets and telecommunications to food safety and environmental protection. Administrative law governs the operation and procedures of these agencies. Its scope includes the substantive rules agencies create, the Administrative Procedure Act, constitutional limitations, and judicial review. For example, the Social Security Administration’s operations and management of public welfare programs fall under administrative law.
Chevron Deference Explained
For decades, federal courts relied on Chevron deference when dealing with agency interpretations of laws. This principle has been cited over 19,000 times, making it one of the most-referenced civil cases in history. Chevron deference involves a two-step process:
First Step: The court must determine if the meaning of the statute is clear. If Congress’s intent is explicit, that intent must be followed.
Second Step: If the statute is ambiguous, the court should determine if the agency’s interpretation is reasonable. If it is, the court must defer to the agency’s interpretation, even if the court thinks there might be a better reading.
The core of the recent ruling can be characterized with one simple line—it eliminates the second step. Courts will no longer defer to agencies when laws are ambiguous; instead, they will independently assess whether the agency’s actions fall within its legal authority.
Liberal Justices’ Dissent
Liberal Justice Elena Kagan, along with two other liberal justices, dissented. Kagan argued that Chevron deference promotes legal stability and predictability, reduces judicial workload, and respects agency expertise. She warned that the majority’s decision will cause a significant upheaval in the legal system, disrupting many settled interpretations and threatening the interests of those who have legitimately relied on them. Kagan criticized today’s decision, “a rule of judicial humility gives way to a rule of judicial hubris.”
Impact of Overturning Chevron Deference
With Chevron deference overturned, more stakeholders are likely to challenge agency actions in court, questioning whether agencies have overstepped their bounds. This includes parties of direct interest and political groups. For instance, the conservative Republican Study Committee (RSC) sees this as an opportunity for Congress to reclaim power from administrative agencies. They have urged members to scrutinize every regulatory action from the Biden administration that relied on Chevron deference.
To avoid a flood of legal challenges against the rulemaking of administrative agencies in the future, Congress will need to provide clearer directives to agencies, and agencies will need to be more careful when creating rules. While this could lead to a more stable regulatory environment in the long run, it might also slow down legislative and regulatory processes.
Will Congress Reinstate Chevron Deference?
Although the Supreme Court has overturned Chevron deference, Congress could reinstate it by amending the Administrative Procedure Act or explicitly delegating interpretive authority to agencies on a case-by-case basis. Whether this will happen is primarily a political question influenced by lobbying efforts and broader legislative priorities. However, it could also become a legal issue, as Loper Bright suggested–broad statutory authorizations like Chevron deference may be unconstitutional.
Conclusion
The overturning of Chevron deference marks a significant shift in U.S. administrative law. The legal framework and administrative decision-making processes will face new challenges with emerging disputes and increased uncertainty. It is recommended for stakeholders, including businesses, regulatory agencies, and legal practitioners, to closely monitor subsequent court decisions and congressional actions. Even though change is inevitable, the precise contours of this new legal landscape remain to be seen.
