Contributors

Eric P. Weiss

Principal

In Overruling the Chevron Doctrine, SCOTUS significantly reduces, if not eradicates, a court’s ability to defer to federal agency interpretations of federal regulations.

The Chevron Deference Doctrine overruled

The Chevron doctrine states that if Congress has not addressed the question at the center of a dispute, a court was required to uphold the agency’s interpretation of the statute if it was reasonable. In 2022, the United States Supreme Court decided to review two cases (Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce) to determine whether the so-called Chevron deference doctrine should by overruled, upheld or modified.

In a major ruling, the Supreme Court overruled the Chevron deference doctrine, resulting in a sharp reduction in the power of federal agencies to interpret the laws they administer. Rather than defer to the agencies’ interpretations, the Supreme Court ruled that courts should rely on their own interpretation of ambiguous laws. The decision in Loper will likely have far-reaching effects across the country, from environmental regulation to healthcare costs.

Chief Justice Roberts wrote the 6-3 opinion, that included several reasons to overrule the Chevron doctrine:

• the Chevron doctrine is inconsistent with the Administrative Procedure Act (“APA”), a federal law that sets out the procedures that federal agencies must follow as well as instructions for courts to review actions by those agencies. The APA, Roberts noted, directs courts to “decide legal questions by applying their own judgment” and therefore “makes clear that agency interpretations of statutes — like agency interpretations of the Constitution — are not entitled to deference. Under the APA, Roberts concluded, “it thus remains the responsibility of the court to decide whether the law means what the agency says.”
• Roberts rejected any suggestion that agencies, rather than courts, are better suited to determine what ambiguities in a federal law might mean. Even when those ambiguities involve technical or scientific questions that fall within an agency’s area of expertise, Roberts emphasized, “Congress expects courts to handle technical statutory questions” – and courts also have the benefit of briefing from the parties and “friends of the court.”
• Roberts observed, even if courts should not defer to an agency’s interpretation of an ambiguous statute that it administers, it can consider that interpretation when it falls within the agency’s purview, a doctrine known as Skidmore deference.
• Roberts noted that the doctrine of stare decisis - the principle that courts should generally adhere to their past cases – does not provide a reason to uphold the Chevron doctrine. Stare decisis aside, Roberts characterized the Chevron doctrine as “unworkable,” one of the criteria for overruling prior precedent, because it is so difficult to determine whether a statute is indeed ambiguous.
• because of the Supreme Court’s “constant tinkering with” the Chevron doctrine, along with its failure to rely on the doctrine in eight years, there is no reason for anyone to rely on Chevron. To the contrary, Roberts suggested, the Chevron doctrine “allows agencies to change course even when Congress has given them no power to do so.”

The new ruling will apply prospectively to cases involving the interpretation of a federal regulation. However, Roberts indicated that the court’s decision would not require earlier cases that relied on Chevron to be overturned. “Mere reliance on Chevron cannot constitute a ‘special justification’ for overruling” a decision upholding agency action, “because to say a precedent relied on Chevron is, at best, just an argument that the precedent was wrongly decided” – which is not enough, standing along, to overrule the case.

Potential impact of the decision on employers

Although the underlying cases were not workplace-related, the decision may significantly affect employers because of the many regulations issued by federal agencies such as the Equal Employment Opportunity Commission (“EEOC”), Department of Labor (“DOL”), Occupational Safety and Health Administration (“OSHA”), and National Labor Relations Board (“NLRB”) that affect the workplace every day.

While less judicial deference to federal agencies may hold some immediate appeal for employers, it also may bring less predictability. An uncertain regulatory backdrop and a potentially chaotic landscape of court decisions across jurisdictions can make it harder for employers to manage their workplace, as a practical matter, and to comply with the law.

Employers must stay on top of developing cases and know how to reconcile conflicting court decisions around the country, in addition to using the other compliance tools at their disposal — including agency guidance.

Finally, while employers should not expect an immediate change to the interpretation of employment statutes, employers facing lawsuits based upon agency interpretations of the law may have additional legal arguments in defense of litigation.