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SCOTUS Exposes All Regulations to Court Scrutiny in Loper Bright

By:
Gary Forester, JD, LLM
Published Date:
Jan 7, 2025

In Loper Bright Enterprises et al. v. Raimundo, 544 F. Supp. 3d 82, 103-04 (2021), the U.S. Supreme Court overturned the Chevron doctrine, a policy of deferring court discretion to federal agency regulations. Chief Justice Roberts authored the majority (6-3) opinion.

Facts of the Case

Two commercial fishing companies challenged an administrative rule by the National Marine Fisheries Service that required the companies to cover the cost of a mandated government observer.

Ruling

In an opinion delivered by Chief Justice Roberts, SCOTUS overturned the longstanding judicial deference to administrative agencies on interpretation of federal statutes. The U.S. Constitution and the Administrative Procedure Act (1946) leave statutory interpretations to the courts. The APA establishes the guidelines for implementing federal administrative rules but allows for judicial review (Section 10) of “all relevant questions of law.”

Prior to Chevron, case law interpreting the APA allowed judicial intervention based on the thoroughness, reasoning, and consistency of the applicable administrative regulation. However, Chevron (Chevron USA v. National Resource Defense Council, Inc., 467 U.S. 837 [1984]) removed federal court interference from any “permissible” administrative interpretations. Even if a federal court disagreed with an administrative interpretation, the court would yield to it if deemed “reasonable.”

Chevron mandated a two-part process for courts to review a challenge to a statutory interpretation by a federal agency. First, if Congress addressed the issue, the law requires no administrative or other interpretation. If, however, the statute was ambiguous, the court had to assess whether the regulatory agency’s interpretation was “reasonable” and enforce any such reasonable interpretation.

Thus, the Chevron doctrine directed courts to defer to reasonable interpretations by federal agencies regarding ambiguous federal laws. Such judicial deference to regulatory agency interpretation essentially presumed enforceability when Congress reflected its intention that a regulatory body fill any gap in statutory coverage. Chevron thus required judicial deference to regulatory agency interpretation of ambiguous law or situations not addressed by federal statute. The Chevron doctrine had been followed for forty years.  

In Loper, the federal district (trial) court found that the federal statute at issue clearly authorized the mandated observer (and the associated cost to be paid by the fishing company). The D.C. (First) Circuit Court of Appeal affirmed that the administrative regulation provided a reasonable interpretation of the statute (i.e., leaving the determination to the agency, per Chevron).

Justice Roberts (for the majority) vacated the lower court rulings and overturned Chevron. Justice Roberts relied on the traditional role of the courts to interpret all laws. SCOTUS rejected the idea in Chevron that “statutory ambiguities are implicit delegations to agencies.” Justice Roberts harkened to the founders and the role of the courts “to decide legal questions by applying their own judgment.” Justice Thomas (concurring) confirmed that “Chevron deference also violates our Constitution’s separation of powers.”

Justice Roberts explained that the courts are free to defer to administrative regulation based on the court’s assessment of its thoroughness, reasoning and consistency. The courts must then, however, apply their independent judgment. Federal Courts may now freely interpret otherwise ambiguous federal statutes.

The Court clarified that prior decisions (based on Chevron) remain enforceable. Unambiguous grants of power by Congress to the applicable administrative agency will also continue to be enforced. Legislative delegation of power is not a statutory gap or ambiguity.

Although existing rulings will be respected, SCOTUS recently confirmed that even long-enforced regulations are exposed to challenge. In Corner Post, Inc. v. Board of Governors of the Federal Reserve System, 603 U.S. ___ (2024), SCOTUS clarified that claims against the U.S. Government would not be barred by older regulations. SCOTUS ruled that the six-year statute of limitations on challenges to regulations will not start to run until the plaintiff is injured by agency action.

The courts may now rely on their own interpretation of laws in dispute. Loper will impact tax as well as environmental, healthcare and other laws subject to any federal regulation. Interestingly, technical professionals outside the government will likely become integral to the judicial process. Courts no longer must defer to the technical interpretation of federal (executive branch) agency technicians. The Loper ruling balances the scales from essentially mandatory enforcement of agency interpretation (favoring the government) to an open debate of statutory ambiguity. 

Expect a wave of challenges to existing federal regulations.


Gary Forster, JD, LLM, is managing partner and co-founder at the law firm of ForsterBoughman. Orlando, Fla.

 
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