You may be asking. What is Chevron deference? How did it die? Why should I care?
All fair questions.
I will start by answering the last one. If you own, operate, or manage a business covered by the complex web of federal employment regulations, you should care a lot about the death of a doctrine that helped fuel a 40-year expansion of your responsibilities and obligations.
More on that later. Let’s get back to the beginning.
What is Chevron deference?
Chevron refers to a 1984 decision issued by the U.S. Supreme Court: Chevron U.S.A., Inc. v. National Resources Defense Council. In that decision, the Supreme Court created a two-step process for courts to apply when deciding lawsuits challenging the regulatory actions of agencies.
In step one, the court determined whether the intent of Congress in passing the statute that led to the challenged agency action was clear. If it was, the court enforced that intent and rejected agency actions or constructions that conflicted with it.
If the statute was silent or ambiguous with respect to Congress’s intent, the court would proceed to the second step and determine whether the agency had offered a “permissible” interpretation of the statute. Not a high hurdle for the agency.
If the agency interpretation of the statute was “permissible,” the court was required to uphold the regulatory action. Even if the court disagreed with the agency.
During its existence, the Chevron doctrine was routinely applied to uphold a myriad of federal regulations and was regularly criticized as contributing to the rise of the “administrative state.”
Although they were not parties to the Chevron case, the decision applied to the U.S. Department of Labor, the Equal Employment Opportunity Commission, and the Occupational Safety and Health Administration, among all the other agencies that interpret and enforce federal laws.
But on June 28, 2024, the current Supreme Court overruled Chevron.
Loper Bright Enterprises
Loper Bright Enterprises is a family-run Atlantic fishing business regulated by the National Marine Fisheries Service.
The statute creating the NMFS required that certain types of fishing vessels had to allow federal “observers” on board to monitor compliance with applicable laws. Adding insult to injury, the statute also required that certain vessels pay for the observers. Under the statute, there were three groups of fishing vessels that could be required to pay for observers – foreign vessels, certain limited access vessels, and vessels in the North Pacific. The statute said nothing about requiring Atlantic fishing vessels to pay for observers.
Nonetheless, the NMFS required Loper Bright to pay for on-board observers, to the tune of $710 a day. In 2020, the company filed a lawsuit challenging the regulation.
In the lower courts, the lawsuit crashed headlong into Chevron. It was dismissed (and the dismissal was upheld on appeal) because the courts found that the statute was ambiguous, and that the NMFS interpretation was “permissible.”
But Loper Bright asked the Supreme Court to review. And, landing the biggest fish in this tale, Loper Bright managed to get Chevron overruled.
The death of Chevron
Understanding why the Court overruled a 40-year-old precedent that had become engrained in the fabric of administrative law requires several trips on the Constangy “way-back” machine.
The founding of our Republic
The Court began its analysis of Loper Bright’s claims by noting that the Framers of the Constitution intended for the interpretation of the laws passed by Congress to be within “the proper and peculiar province of the courts.”
Quoting from multiple Supreme Court decisions between 1803 and 1932, the Court explained that the interpretations of ambiguous statutes by the Executive Branch (and, eventually its agencies) were entitled to “respect.” But “respect” meant just that, and nothing more. The views of the Executive Branch could help to inform the Judiciary, but they could not supersede a court’s independent judgment about the meaning of a statute.
Simply put, for more than 150 years after the founding of our Republic, it was well settled that Congress drafts and passes laws, courts interpret their meaning, and the President enforces them.
1932 and the New Deal
In 1929, the American stock market crashed, and the country slipped into what became known as The Great Depression. With his election in 1932, President Franklin D. Roosevelt embarked on an aggressive campaign to revitalize the economy, and that included a rapid expansion of the federal administrative state.
Despite these circumstances, federal courts continued to say that questions of statutory interpretation were for the courts to resolve, although they gave appropriate weight to the judgment of those who administered the statutes.
As the court in Loper Bright summed up this history, “[N]othing in the New Deal era or before it … resembled the [Chevron] deference this court would begin applying.”
1946 and the Administrative Procedure Act
As the administrative state spawned by the New Deal continued to grow, Congress passed the Administrative Procedure Act as “a check upon administrators whose zeal might otherwise have carried them to excesses not contemplated in the legislation creating their offices.”
To protect against such excesses, the APA states that when a court reviews an agency’s actions, the court “shall decide all relevant questions of law, interpret constitutional and statutory provisions and determine the meaning or applicability of the terms of an agency action.”
As the Court in Loper Bright recognized, the APA “codifies for agency cases the unremarkable, yet elemental proposition reflected by judicial practice dating back to [the earliest days of our Republic]: that courts decide legal questions by applying their own judgment” and not by mandatory deferral to the “permissible” interpretations of bureaucrats.
That language in the APA would prove to be the harpoon Loper Bright needed to kill the whale that Chevron deference had become.
Back to 2024
Having laid out the historical context, Chief Justice John Roberts, writing for the majority in Loper Bright, left no doubt about the status of Chevron when he concluded,
Chevron is overruled. Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority ... Careful attention to the judgment of the executive Branch may help inform that inquiry .... But courts need not and under the APA may not defer to an agency interpretation of law simply because a statute is ambiguous.
As the Chief Justice explained throughout his majority opinion, (1) federal courts (not administrative agencies) have the tools and expertise needed to interpret ambiguous statutes, and (2) while the opinions of administrative agencies are entitled to respect, those opinions are not binding on the courts.
What this means for employers
As already noted, Loper Bright applies to all federal agencies and their regulatory agendas, including
- The DOL’s regulation increasing the salary threshold for overtime exempt status.
- The EEOC’s regulation that includes abortion as a pregnancy-related medical condition under the Pregnant Workers Fairness Act.
- The National Labor Relations Board’s proposed rule on joint employer status.
- The Federal Trade Commission’s recent ban on non-competition agreements (which was preliminarily enjoined on a limited basis last week by a federal court in Texas).
Do I have your attention now?
However, questions abound about the impact of the death of Chevron.
What level of “respect” will judges give to agency interpretations? To what extent will judges apply the undisturbed holdings of older cases that relied on Chevron deference? How will agencies try to achieve their regulatory agendas in a post-Chevron era?
All of which allows me to display my keen grasp of the obvious and close by saying that this will not be our last article about Loper Bright.