Each year, new rules and regulations are made and interpreted by federal agencies based on the laws established by Congress. However, when Congress is silent or ambiguous on the law, federal agencies are given deference to reasonably interpret them, which can sometimes result in federal overreach. However, said deference may soon be limited or done away with as the United States Supreme Court will hear a challenge to how courts assess such rulemaking in Loper Bright Enterprises v. Raimondo (“Loper”),[1] which will decide the fate of the legal doctrine known as the Chevron Deference (“Chevron Doctrine”).[2]
The Chevron Doctrine, which refers to the level of deference federal courts afford to interpretations of certain statutes by federal administrative agencies, came to fruition in the landmark and largely cited case of Chevron, U.S.A., Inc. v. National Resources Defense Council, Inc.[3] In that case, the Supreme Court constructed a legal test for when a court should defer to an agency’s interpretation of ambiguous statutes. The Supreme Court held that deference is appropriate where: (1) the agency’s interpretation or determination is reasonable; and (2) Congress has not spoken directly to the precise issue at question.[4] Based on the Chevron Doctrine, federal agencies, like the Federal Energy Regulatory Commission (“FERC”), Environmental Protection Agency (“EPA”), Bureau of Land Management (“BLM”), Securities and Exchange Commission (“SEC”), U.S. Department of Energy (“DOE”), and others, have continuously asserted the Chevron Doctrine as a defense to their interpreted rules and ultimately expand their regulatory power and influence over time.
The Loper case involves a rule finalized by the National Marine Fisheries Service (“NMFS”) that would require fishing companies to fund their own, now required, at-sea monitors.[5] In other words, the rule would require fishermen to have federal inspectors come onto their ships to observe operations and require them to compensate the inspectors for their time. The Appellants argue that the statutes upon which the NMFS receives its authority do not authorize the NMFS to require industry-funded monitors.[6] After arguments were heard, the D.C. Circuit affirmed the District Court’s opinion that held the NMFS had the authority to require industry-funded monitoring systems on the fishing companies.[7] This case was appealed to the United States Supreme Court, where they granted certiorari, but only on the fundamental question of who is best suited to make these rules, thus determining whether the Chevron Doctrine should be limited, overturned, or left intact.[8]
Various companies and others have filed amicus curiae briefs with the Supreme Court where they have argued that federal agencies have consistently encroached on the legislative and judicial powers by wielding the Chevron Doctrine as a sword. Supporters of the Chevron Doctrine argue that it reflects Congress’ intent to delegate interpretive authority to agencies that have greater expertise in complex administrative matters. The Biden administration has defended broad agency deference under Chevron Doctrine, including the NMFS rule, arguing that it has been relied upon and used for four decades.
So, what are the real-world implications if the Supreme Court overturns or narrows the Chevron Doctrine? For starters, it will be easier for individuals and businesses to challenge regulations. Second, Congress will need to step in and provide clear and unambiguous delegation of authority to federal agencies to reflect their congressional intent. Third, federal agencies will lose the current deference power and force them to align their rules and regulations with clear statutory authority. Fourth, courts will continue to inquire into how agencies have interpreted and applied the law, but such agencies will be without their Chevron sword (if overturned). Lastly, any intent by federal agencies to implement their political agenda via their rulemaking abilities should be diminished.
Thus, the results will likely lead to increased legal challenges by individuals and entities against federal agencies for what would be considered federal overreach. For example, it is anticipated that if the Chevron Doctrine is limited or overturned, the SEC’s authority to promulgate its proposed Climate Change Rule will be challenged to determine whether Congress delegated such rulemaking authority to the SEC. Similar challenges will likely be made against many federal agencies, including those relating to proposed interpretations and rules under the Clean Water Act, Clean Air Act, Mineral Leasing Act, Energy Policy Act, and others.
While the case will not be argued until the fall of 2023 and a decision coming sometime thereafter, one thing is for sure, Loper is sure to shake things up.
Article authored by Andrew Good, Molly Pela, and Matthew Gibson.
[1] 45 F.4th 359 (D.C. Cir. 2022), cert. granted in part, 2023 U.S. LEXIS 1847. The U.S. Supreme Court granted cert. with a hearing scheduled for the Fall of 2023.
[2] Loper Bright Enters. V. Raimondo, 2023 U.S. LEXIS 1847.
[3] 467 U.S. 837 (1984).
[4] Id. at 842-843.
[5] Loper Bright Enters. v. Raimondo, 45 F.4th 359, 363-364.
[6] Id.
[7] Id.
[8] Loper at 2023 U.S. LEXIS 1847.
Molly advises on all aspects of litigation, from risk mitigation to pre-suit investigation to trial investigation, and has extensive experience conducting depositions and handling motion practice. She represents clients in connection with commercial and industrial accident claims, construction disputes, engineering and design defect cases, contract and indemnity disputes, and general insurance defense litigation. In the oil and gas sector, Molly advises service companies, manufacturers, producers, operators, well interest owners, and others in complex matters before state and federal courts and regional governing agencies.
Andrew represents companies active in the oil and gas industry in both litigation and arbitration matters, from risk management to trial. He also advises clients on compliance and regulatory issues and handles proceedings in front of administrative agencies / governmental bodies, including the Ohio Department of Natural Resources and the Ohio Department of Commerce.
In addition to his energy practice, Andrew has broad experience in commercial and business litigation, including breach of contract / lease claims, construction disputes, non-compete / non-solicitation disputes, trade secrets, business torts, and real property-related claims. He is OSHA certified in Construction Safety and Health and has drafted and reviewed numerous construction contracts.