In Loper Bright Enterprises v. Raimondo, the U.S. Supreme Court overruled the Chevron deference doctrine, which had guided judicial deference to federal agency interpretations of ambiguous statutes for nearly 40 years.
The Chevron deference doctrine emerged from the U.S. Supreme Court’s 1984 decision in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. It established a two-step framework for courts to follow when reviewing federal agency interpretations of ambiguous statutes:
- Step One: Courts must determine whether the statute is clear. If the statutory language is unambiguous, courts must enforce the statute as written, without deferring to the agency’s interpretation.
- Step Two: If the statute is ambiguous, courts defer to the agency’s interpretation as long as it is reasonable and consistent with the statute.
The doctrine was rooted in the principle that agencies, as experts in their respective fields, are better equipped than courts to interpret technical or complex statutory provisions. Chevron deference shaped administrative law for decades by granting agencies significant discretion in policymaking. However, it also sparked debates about the balance of power between agencies, courts, and Congress
Background: The Loper case involved a rule by the National Marine Fisheries Service (NMFS) under the Magnuson-Stevens Act (MSA), requiring Atlantic herring fishermen to fund onboard third-party observers collecting data for government use. Vessel owners challenged this rule, arguing that the MSA did not authorize NMFS to mandate industry-funded monitoring.
Supreme Court Decision: On June 28, 2024, the Supreme Court, in a 6-3 decision, overturned the Chevron doctrine. Chief Justice John Roberts, writing for the majority, stated that Chevron deference was inconsistent with the Administrative Procedure Act (APA) and prevented courts from exercising their independent judgment. The Court emphasized that statutory interpretation is the sole province of the judiciary.
Implications: This ruling mandates that courts exercise independent judgment on agency interpretations without giving automatic deference, likely resulting in greater scrutiny of agency decisions. Agencies may continue to use their technical expertise in justifying their actions, but their interpretations will now be considered persuasive rather than authoritative. This shift is expected to affect agency policymaking and litigation, particularly in actions like climate regulations or controversial policies.
Justice Elena Kagan, in her dissent, criticized the ruling as a significant disruption to the legal system, expressing concern over the increased judicial power and the potential challenges to agency rules.
The decision has significant implications for employers and labor and employment law. By overturning the Chevron deference doctrine, the ruling places stricter limits on federal agency authority, requiring courts to independently interpret ambiguous statutes without deferring to agency interpretations. This shift could lead to the following impacts:
- Increased Legal Challenges to Agency Rules
- Employers and business groups may challenge agency rules more frequently, especially those enacted during the Biden administration that increase regulatory burdens on employers. For example:
- U.S. Department of Labor (DOL) Rules: Employers may question the validity of wage and hour regulations, such as rules related to the Fair Labor Standards Act (FLSA) or the Pregnant Workers Fairness Act (PWFA).
- Occupational Safety and Health Administration (OSHA): Health and safety standards, including COVID-19-related rules, may face heightened scrutiny.
- Narrower Scope for Agency Discretion
- Federal agencies like the DOL, Equal Employment Opportunity Commission (EEOC), and National Labor Relations Board (NLRB) will need to base their rules and enforcement actions on clearer statutory mandates.
- Rules that rely on agencies interpreting vague statutory language may now be at greater risk of being invalidated by courts.
- Potential Deregulation
- The ruling aligns with efforts to limit regulatory overreach, allowing courts to invalidate rules deemed outside an agency’s statutory authority.
- Employers might benefit from reduced compliance obligations if certain rules, such as those increasing penalties for child labor violations or expanding overtime eligibility, are invalidated.
- Legal Uncertainty
- Employers face uncertainty about the enforceability of existing and new regulations.
- Pending regulations, such as those governing joint employment, employee classification, or tipped wages, may be delayed or subject to increased litigation.
- State-Level Implications
- While the decision applies to federal law, some states may reconsider their own deference doctrines for state agency rules. Employers operating in multiple states may face varied legal landscapes as states either embrace or reject Loper Bright principles.
- Judicial Power and Outcomes
- Courts now have greater authority to decide the scope of agency rules. Employers must monitor judicial interpretations of key labor and employment laws as they replace agency interpretations with court rulings.
The Loper Bright decision introduces a new era of heightened scrutiny for federal regulations, reshaping the relationship between employers, agencies, and courts in the labor and employment landscape.