The US Supreme Court overrules Chevron
15.8.2024
A majority of the United States Supreme Court in June abolished Chevron deference—a doctrine which had been a cornerstone of US administrative law for 40 years. The decision was long-anticipated, but is likely to be divisive. This post explains the Court’s reasoning in Loper Bright Enterprises v Raimondo, 603 US ___ (2024) (Loper Bright) and some of its possible implications for US and Australian administrative law.
What is Chevron deference?
Chevron deference is a doctrine which compels courts to defer to an expert administrative agency’s interpretation of ambiguous statutory language, provided that interpretation is reasonable. It comes from Chevron USA v Natural Resources Defense Council 467 US 837 (1984), in which the unanimous Supreme Court overturned a decision of the DC Circuit written by Judge Ruth Bader Ginsburg that the Environment Protection Agency had incorrectly interpreted the Clean Air Act as regards what defined a ‘source’ of air pollution for the purposes of obtaining permits. The EPA had adopted a definition that allowed companies to modify plant facilities without additional permits as long as overall emissions did not increase. The Court found that Congress had not specifically defined ‘source’ and that the EPA’s interpretation was a reasonable policy choice to which the Court should defer.
As Merrill argues, Chevron was not identified as a landmark at the time, but was ‘considered routine’ and said to formalise a long-standing presumption. It nonetheless came to be known as landmark decision, with enormous significance for US administrative law and the operation of the administrative state. In more recent years, it has become controversial and disputed. In Loper Bright, a majority of the Supreme Court overruled the longstanding doctrine.
Loper Bright
Atlantic herring fishermen were upset with a rule established by the National Marine Fisheries Service (NMFS) requiring the fishermen to pay for federal monitors to audit their practices under the Magnuson–Stevens Fishery Conservation and Management Act (MSA). The MSA requires that specified fisheries carry observers, but does not address whether Atlantic herring fishermen may be required to bear the associated costs. At one point, NMFS funded the observer coverage required by the New England Fishery Management Council. In 2020, however, the council amended its fishery management plans to require fishermen to pay for observers where federal funding was not available. In Loper Bright and the associated case of Relentless Inc. v Department of Commerce 22–1219 (Relentless) the fisherman challenged their obligation to pay, arguing that the MSA does not authorise the NMFS to mandate that fishermen pay for observers.
Two members of a three-judge panel of the Court of Appeals for the District of Columbia followed the two-step approach in Chevron. Under that approach, the Court asks two questions: (1) Did Congress decide the ‘precise question at issue’ in the statute? (2) If not, was the agency’s interpretation reasonable?
Under step one the Court of Appeals determined that the language of the MSA was ambiguous regarding who should pay for monitoring of herring fishery. Under step two it concluded that the Fisheries Service reasonably interpreted the MSA in the face of its ‘silence on the issue of cost of at-sea monitoring’ (370). Judge Justin R. Walker dissented on the application of Chevron.
The fishermen appealed to the Supreme Court.
The majority opinion
The Supreme Court overturned the decision and overruled Chevron in a 6:2 majority and Relentless by a 6:3 majority. Justice Jackson was recused from Loper Bright due to having heard the case in the DC Court of Appeals, though she did not give judgment below due to her Supreme Court appointment. She joined the dissenting justices in Relentless.
Chief Justice Roberts wrote the opinion of the Court, which Thomas, Alito, Gorsuch, Kavanaugh and Barrett JJ joined.
The decision began by asserting that Chevron was incompatible with Marbury v Madison, quoting Marshall CJ’s declaration that ‘it is emphatically the province and duty of the judicial department to say what the law is’ (7). This separation was said to inform the fundamental structure of government: ‘The Framers . . . anticipated that courts would often confront statutory ambiguities and expected that courts would resolve them by exercising independent legal judgment’ (23).
The Chief Justice stated that this basic structure informed the Administrative Procedure Act (APA), s 706 of which delineates the procedure for judicial review of administrative action. Section 706 of the Act directs that:
To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action.
The Chief Justice noted that s 706 does not prescribe a standard of deference, but is rather totalising in requiring that Courts decide all questions of law presented. Conversely, he found that judicial review of agency policymaking and factfinding did involve deference in provisions such as s 706(2)(A), which states that agency action is to be set aside if ‘arbitrary, capricious, [or] an abuse of discretion’ (14). This reading caused the Chief Justice to summarise that the APA ‘codifies for agency cases the unremarkable, yet elemental proposition reflected by judicial practice dating back to Marbury: that courts decide legal questions by applying their own judgment’ (14).
As a question of policy, the Chief Justice found the doctrine ‘misguided because agencies have no special competence in resolving statutory ambiguities’ (23). That statement refers to a binary that hangs over Loper Bright: whether the interpretation of an ambiguous statute conferring power on an agency is a question of law or policy. The Chief Justice said: ‘The view that interpretation of ambiguous statutory provisions amounts to policymaking suited for political actors rather than courts is especially mistaken, for it rests on a profound misconception of the judicial role’, adding that: ‘Courts interpret statutes, no matter the context, based on the traditional tools of statutory construction, not individual policy preferences’ (26). Positioning statutory ambiguities as fundamentally a question of law dovetails the question with the concerns of constitutional structure referenced above: the Framers intended that federal judges have ultimate judgment on questions of statutory interpretation, free from executive influence.
The Chief Justice also noted that Chevron presumed an expertise which may not exist: ‘the Government and, seemingly, the dissent continue to defend the proposition that Chevron applies even in cases having little to do with an agency’s technical subject matter expertise’ (24). It seems likely, however, that in such a scenario the agency’s interpretation would simply fail on the second limb of the test for being unreasonable.
This new approach was not said to disregard an agency’s interpretation entirely: ‘The parties and amici in such cases are steeped in the subject matter, and reviewing courts have the benefit of their perspectives’ (24-25). This is referred to as Skidmore deference, which involves a court treating the rulings, interpretations and opinions of administrative agencies not as controlling on courts but as providing a body of expertise to which the Courts can look for guidance. The Court will give that expertise varying weight depending on ‘the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control’ (Skidmore v Swift & Co 323 US 134 at 140 (1944)). That form of deference remains alive in US public law.
Finally, the Chief Justice held that it was permissible to overrule Chevron because it did not provide a clear test. While it was of longstanding application, ‘its flaws were nonetheless apparent from the start, prompting this Court to revise its foundations and continually limit its application’ (30). This related to stated difficulties in deciding a standard of ambiguity which must exist before the court will defer to an agency, or defining what constitutes a ‘reasonable’ interpretation such that deference was warranted. He reasoned, apparently without irony, that ‘the concept of ambiguity has always evaded meaningful definition’ (30).
Thomas J and Gorsuch J each wrote concurrences reinforcing these same points. Thomas J said that the doctrine was inconsistent with the separation of powers and Marbury (2):
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.
Gorsuch J concurred, focusing on the validity of the Courts’ overruling its own precedent by way of a brief history of the common law. Repeating the concerns expressed by both other majority opinions, he said that the correction of past precedent is particularly open on questions of constitutional interpretation, ‘for they can be corrected otherwise only through the amendment process’ (8-9). Turning to Chevron itself, he said that the decision ‘forces judges to abandon the best reading of the law in favor of views of those presently holding the reins of the Executive Branch. It requires judges to change, and change again, their interpretations of the law as and when the government demands’ (18). This again rests on an understanding of statutory ambiguities as being the exclusive purview of the courts, as informed by the strict separation of powers.
The dissenting opinion
The leading dissent was written by Kagan J, joined by Sotomayor J, and Jackson J in respect of Relentless. It had a high temperature, introduced with the assessment that ‘a longstanding precedent at the crux of administrative governance thus falls victim to a bald assertion of judicial authority. The majority disdains restraint, and grasps for power’ (4).
Beginning with the core question of expertise, Justice Kagan wrote that the special competence of the Courts in construing statutes is not encroached by Chevron, which was specifically directed towards points of ambiguity to be resolved by policy questions. Of the majority’s more totalising approach to questions of construction she wrote: ‘Score one for self-confidence; maybe not so high for self-reflection or -knowledge’ (13).
She said that the majority overvalued generality and the expense of precedent, in that they spoke in abstract terms regarding who should interpret statutes, as detached from actual cases. She gave a series of examples from case law such as whether an alpha amino acid polymer qualifies as a protein, or whether a ‘stationary source’ under the Clean Air Act refers to each pollution-emitting piece of equipment within a plant, or the entire plant itself. She wrote that in deferring to agencies on such questions, Chevron ‘rests on a presumption about legislative intent—about what Congress wants when a statute it has charged an agency with implementing contains an ambiguity or a gap’ (7). This reasoning has intuitive appeal, but does not fully address why Skidmore deference does not properly respect such interpretations.
The dissent then said that s 706 of the APA was ‘perfectly compatible with Chevron deference’ (15), and that the majority’s analysis was ‘grounded on air’ (24). She undertook a compelling textual and historical analysis of the Act, finding that it ‘does not specify any standard of review for construing statutes’ (16), and thus does not resolve the Chevron question.
Finally, she said that ‘abandoning Chevron subverts every known principle of stare decisis’ (24). She positioned this decision within the Court’s recent spur of conservative advancements, most notably Roe v Wade, writing that ‘it is impossible to pretend that today’s decision is a one-off, in either its treatment of agencies or its treatment of precedent’ (32).
The effect of Loper Bright in the US
There has been much speculation by US lawyers and scholars about the effects that Loper Brightwill have on US administrative law. Some have suggested it will make it more difficult for agencies to perform important functions and make their decisions less certain. Others have suggested that the consequences of the decision for agencies may not be quite so momentous because both the Chevron doctrine and the principles of statutory interpretation have considerable scope for judicial discretion in their application.
It is important to point out that, despite overruling Chevron, the majority did not rule out any role for deference in interpretation. As noted above, the majority appeared to leave Skidmore deference untouched—meaning that courts can still give weight to agency interpretations of ambiguous legislation. Further, the Chief Justice’s judgment for the joint majority held that Congress retains the power to grant interpretive authority to agencies and that courts must respect that grant within the limits of constitutionality (17):
In a case involving an agency, of course, the statute’s meaning may well be that the agency is authorized to exercise a degree of discretion… When the best reading of a statute is that it delegates discretionary authority to an agency, the role of the reviewing court under the APA is, as always, to independently interpret the statute and effectuate the will of Congress subject to constitutional limits. The court fulfills that role by recognizing constitutional delegations.
The precise effect of this statement is not yet clear. In referring to a ‘degree of discretion’ that may be granted within a statute, it is at least possible that something stronger than Skidmore deference remains possible within the ambit of a congressional grant. Whether that stronger form of deference catches alight from Loper Bright will depend significantly on how the above paragraph is interpreted by future courts.
It does seem likely that Loper Bright will, at least in the short term, result in an increase in the frequency of challenges to agency action, for which one favourable defence is no longer available. Vickie Patton, General Counsel for the Environmental Defence Fund, said the decision ‘undermines vital protections for the American people at the behest of powerful polluters’. Senator Eric Schmitt wrote for Fox News that the Supreme Court had ‘just defeated Big Government’.
Cass Sunstein has predicted that ‘under Loper Bright, ideological differences within the courts of appeals will increase in cases involving agency interpretations of law’. The Court of Appeals for the First Circuit in Relentless was split according to party of appointment. The District of Columbia in Loper Bright was split according to party of appointment. The Supreme Court was split by party of appointment. Where else is there to go? The first instance judge, a Republican appointee, found for the government; I suppose he could now flip.
Elsewhere, Senator Elizabeth Warren has introduced the Stop Corporate Capture Act to the Senate, seeking to codify the Chevron deference into law, which will almost certainly fail. President Biden recently indicated he would seek Supreme Court reform in the closing months of his term. As with many American endeavours in the coming year, it is difficult to say precisely what this will look like.
Australian public law and Loper Bright
Given that Australian courts have never accepted a doctrine of Chevron deference (save the similarities between it and the now largely historical principle in R Hickman; ex parte Fox and Clinton (1945) 70 CLR 598 that Chief Justice Gageler identified), there are no immediate ramifications of the US Supreme Court’s change in position for Australian public law. Indeed, the Loper Bright decision seems to bring US and Australian administrative law closer together. However, as Susan Rose-Ackerman and Oren Tamir have warned:
The fact that other countries don’t have anything exactly like Chevron is not an argument for overturning Chevron or even for significantly cutting it back. There are many strong reasons that can both explain and justify why other systems lack Chevron and why the U.S. has it.
In other words, it is important not to overlook other significant differences between jurisdictions in public law, law-making, and the operation of the administrative state, before drawing conclusions about how decisions in one jurisdiction might be used, or useful, in another. In the context of deference, for instance, Janina Boughey has explored the distinctions between Australian and US law with respect to the involvement of the administrative state in drafting legislation and how these might affect the justifiability and need for deference. Nevertheless, Loper Bright does make it seem even less likely than ever that Australian courts would be persuaded to embrace a stronger notion of deference.
Harry Sanderson teaches law to undergraduates.
Suggested citation: Harry Sanderson, ‘The US Supreme Court overrules Chevron’ (15 August 2024) <https://www.auspublaw.org/blog/2024/8/the-us-supreme-court-overrules-chevron>