"Chevron Overturned" - what's that?

Summary

To understand the impact of the recent Supreme Court decision, we need to briefly delve into the foundational "Chevron doctrine," which historically directed courts to defer to federal agencies' interpretations of ambiguous statutes. However, the Supreme Court's landmark decision on June 28, 2024, in Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce has overturned this long-standing principle. The decision emphasizes a new approach that requires courts to independently evaluate agency actions under the Administrative Procedure Act (APA). This ruling marks a significant shift, potentially heightening judicial scrutiny over regulatory decisions and redefining the relationship between agencies and the judiciary in U.S. administrative law.

Background: What is the Chevron Doctrine?

Chevron deference, or Chevron doctrine, is an administrative law principle that compelled federal courts to defer to a federal agency's interpretation of an ambiguous or unclear statute that Congress delegated to the agency to administer.

Chevron refers to a legal principle that originates from a landmark U.S. Supreme Court case, Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., decided in 1984. The Chevron doctrine establishes a framework for judicial review of agency interpretations of statutes that Congress has charged the agency with administering. More details on this original landmark decision here: https://en.wikipedia.org/wiki/Chevron_U.S.A.,_Inc._v._Natural_Resources_Defense_Council,_Inc .

A simplified breakdown of the Chevron doctrine is composed of two steps

1. Step One: When a court reviews an agency's interpretation of a statute, it first determines whether Congress has directly spoken to the precise question at issue. If the statute is clear and unambiguous, the court must give effect to the plain meaning of the statute, and the agency's interpretation does not receive deference.
2. Step Two: If the statute is ambiguous or silent on the specific issue, the court defers to the agency's interpretation as long as it is "reasonable and not arbitrary". This is based on the understanding that Congress delegates authority to agencies to interpret ambiguous statutes within their expertise.

Largely oversimplified, the Chevron doctrine granted federal agencies significant authority to interpret and implement regulations unless Congress had clearly spoken on the matter.

The Chevron doctrine has had significant implications for administrative law and the balance of power between the legislative, executive, and judicial branches of government in the United States. The doctrine outlined how courts should approach reviewing agency decisions and interpretations, emphasizing deference to agency expertise where statutory ambiguity exists.

What happened in 2024?

The above doctrine has been in place for 40 years. It provided federal agencies with significant regulatory authority, allowing them to interpret and implement laws unless Congress had clearly spoken on the matter. This principle, established in the landmark Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. case in 1984, aimed to balance administrative efficiency with judicial oversight in interpreting ambiguous statutes.

The Supreme Court on January 17, 2024, heard oral argument in Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce —consolidated cases challenging the scope of the Chevron deference doctrine.

The Supreme Court ruled on June 28, 2024, in Loper Bright and Relentless to overturn the Chevron deference doctrine, holding that federal courts may not defer to an agency’s interpretation of an ambiguous statute.

Here is a link to the full supreme court ruling: https://www.supremecourt.gov/opinions/23pdf/22-451_7m58.pdf

What were the arguments on both sides?

Chief Justice John Roberts, writing for the conservative majority, declared that courts must now independently evaluate whether agencies have acted within their statutory authority, rather than deferring to agency interpretations as per the Administrative Procedure Act (APA).

Briefly, the APA governs how administrative agencies can propose and establish regulations. It sets forth procedures for public participation, rulemaking transparency, and judicial review, ensuring agencies operate fairly and consistently within their delegated authority. It includes requirements for publishing notices of proposed and final rulemaking in the Federal Register, and provides opportunities for the public to comment on notices of proposed rulemaking. The APA requires most rules to have a 30-day delayed effective date.

Link to an excellent summary of the APA: https://www.epa.gov/laws-regulations/summary-administrative-procedure-act

Office of the Federal Register: https://www.archives.gov/federal-register/laws/administrative-procedure

Under Chevron, judges were obligated to adopt an agency's interpretation of an unclear statute as long as it was deemed "reasonable."

However, the Administrative Procedure Act (APA) mandates that judges must independently decide on all legal matters and interpret constitutional and statutory provisions when assessing agency actions.

This dynamic created a notable tension regarding the separation of powers.

"Chevron deference compromises this separation of powers in two ways. It curbs the judicial power afforded to courts, and simultaneously expands agencies' executive power beyond constitutional limits" (Justice Thomas; page 45)

The ruling is splitting the court along ideological lines.

The one side considered Chevron enabling excessive regulatory power held by unelected bureaucrats. The cases the supreme court reviewed, challenged regulations imposed by the National Marine Fisheries Service on the Atlantic herring fishery, where fishing companies contested the agency's authority to impose costly at-sea monitoring. Furthermore, critics of Chevron argued that it empowered agencies too broadly in shaping policies affecting critical areas such as the environment and healthcare – areas traditionally overseen by Congress.

Justice Elena Kagan, joined by Justices Sonia Sotomayor and Ketanji Brown Jackson, condemned the majority's decision as placing judges at the center of administrative decision-making. The Biden administration and others supported the Chevron deference and argued that it allows agencies with expertise to fill gaps in laws passed by Congress effectively.

However, opponents contend that it diminished judicial oversight and accountability.

Now Courts must independently evaluate whether agencies have acted within their statutory authority.

Practically speaking what could this mean?

For example, the Environmental Protection Agency (EPA) might face challenges in enforcing new environmental standards if courts question their statutory authority. Similarly, the Food and Drug Administration (FDA) could encounter obstacles in regulating new medical devices or laboratory-developed tests (LDT's) if courts do not defer to their expertise. Additionally, the Department of Labor might struggle to implement workplace safety regulations if judicial oversight becomes more stringent.

Overall, the ruling's impact the federal agencies' ability to autonomously interpret laws and can potentially reshape the landscape of administrative law and policy implementation across various sectors in the United States.

The supreme court decision reflects a broader trend of reevaluating longstanding precedents, following recent decisions on abortion rights and affirmative action.

Briefly, in June 2022, the supreme court overturned Roe v. Wade and changed the constitutional right to abortion. Link: https://www.cbsnews.com/live-updates/supreme-court-roe-v-wade-abortion-rights/

In June 2023, the supreme court ended affirmative action in higher education . Link: https://www.cbsnews.com/news/supreme-court-affirmative-action-race-college-admissions-harvard-north-carolina/

And now, in June 2024, the supreme court overturned the Chevron doctrine.

The overturning of Chevron deference marks a significant shift that will reshape the dynamics between regulatory agencies and the judiciary. This change might ultimately redefine how agencies interpret and enforce regulations, impacting the broader landscape of administrative law in the United States.

Appendix 1.

What this could mean for the recent FDA rule on overseeing Laboratory-developed tests and the ACLA lawsuit?

Now that the Chevron deference is overturned - there could be significant implications for both the FDA's regulatory authority and the outcome of the recent ACLA lawsuit.

Implications of the FDA Rule on LDT's:

• Without the Chevron deference, courts would no longer automatically defer to the FDA's interpretation of statutes when reviewing challenges to its regulations
• This could result in courts independently evaluating whether the FDA has exceeded its statutory authority in regulating LDT's (or not).
• The FDA may face stricter scrutiny and could potentially see its regulatory actions challenged more frequently and successfully if courts find regulatory overreach

Implications for the ACLA lawsuit:

• The ACLA complaint against the FDA rule on LDTs will no longer face one key hurdle: the Chevron deference.
• Courts will independently assess whether the FDA has the legal authority under existing statutes to issue regulation affecting LDT's.
• ACLA will have a stronger legal argument if –and that is a strong "if"– it can demonstrate that the FDA's rule goes beyond what Congress intended in the relevant statutes
• Simply put overturning of the Chevron deference strengthens the argument for independent re-evaluation.