After Chevron: The end of the regulatory state?

The June 28, 2024, ruling by the Supreme Court to overturn the Chevron precedent in the Loper Brightcase has raised concerns about the stability of the regulatory state, which is based on the regulatory authority of agencies with varying administrative discretion.

?

However, the permanence of the regulatory state, at least for now, is not at imminent risk.

?

A common problem regarding the modern administrative state that emerged during the 20th century is how to allocate power between the Legislative and Executive branches. Regarding complex and dynamic problems—such as environmental protection—the Constitution has to decide what decisions should be adopted by the Legislative branch and what decisions pertain to the executive branch's domain.

?

In the 19th century, it was easier for Congress to predict, for instance,? environmental problems and make decisions. However, with the uncertainty of climate change, the decision-making process has become more challenging. The technical choices that need to be made based on policy considerations make it difficult for Congress to dominate the discussion. As a result, the modern state is mainly administrative as Congress allocates the agency's policymaking decisions.

?

In order to uphold the rule of law, the regulatory authority of the agency should be subject to oversight and, most importantly, review by the Judiciary. A common principle in contemporary administrative law is acknowledging a margin of deference in favor of agencies that allows them to maintain policy discretion within the scope of the Executive while being subject to deferential judicial review. This policy discretion is also subject to non-judicial controls based on principles such as accountability and transparency.

?

The Chevron doctrine, which is no longer in effect, addressed the issue of deference by establishing a rule that was often adjusted in various Supreme Court opinions and interpretations by lower courts: when an agency provides a reasonable interpretation of an ambiguous statute, courts should generally defer to that interpretation rather than imposing their own. The application of this rule depended on whether the statute in question was actually ambiguous.

?

Following many of the critics against the Chevron doctrine, in the Loper Bight case, the Supreme Court concluded that deference based on ambiguous statutes violates the Constitution. Ambiguity is a question of law, and the Judiciary retains the ultimate power to review such questions. As a result, agencies will no longer be favored by any deference when interpreting ambiguous statutes.

?

But that does not mean that agencies will not have any deference at all. On the contrary, the Loper Bright case acknowledges that Congress tends to delegate discretional authority to the agencies, allowing them to decide and implement public policies. Courts should stay out of the policy space. However, they retain the power to review the regulation by the Administrative Procedure Act (APA) and, more importantly, the arbitrariness standard of review.

?

Although the Supreme Court did not elaborate on the constraints that apply to the judicial review of administrative discretion, it is clear that, in theory, agencies will retain some degree of deference. That deference will not depend on the statute's ambiguity but on the express delegation of discretional authority.

?

Considering these conclusions, the allocation of the regulatory power after Loper Bright could be summarized as follows:

?

a)?? Courts will not grant any deference regarding the interpretation of statutes using ambiguous concepts, as is very common in statutes dealing with economic matters. Statutory ambiguity is not a source of policymaking, and as a result, the court retains a de novo review.

?

b)?? Courts will grant deference regarding the discretional authority vested by the statute if the interpretation concludes that Congress granted such a discretional authority. In that case, judicial review will be deferential, meaning that courts should not adopt policy decisions. However, courts will be able to control procedural and substantive validity conditions and, more importantly, the arbitrariness of the regulation adopted.

?

c)??? Following the new major questions doctrine, it is unclear whether this margin of deference will apply to areas of vast economic and social importance. In those areas, Congress can delegate authority only through express, clear, and direct statutes. Because discretionary authority implies some level of statutory gap, courts could consider that no deference applies to major questions

?

As can be seen, the new doctrine is far from clear. Therefore, the interpretation of lower courts and the future opinions of the Supreme Court would eventually define these imprecise criteria. In any case, at least for now, the new Loper Bright doctrine does not require the end of the regulatory state.

?

?

?

?

?

?