07/03/2024 | News release | Distributed by Public on 07/03/2024 07:34
On June 28, 2024, the United States Supreme Court overruled its landmark 1984 decision in Chevron v. Natural Resources Defense Council, 467 U.S. 837 (creating what is known as the "Chevron Doctrine"), which called for judicial deference to agencies in situations where the law is unclear. Since 1984, the U.S. Supreme Court has relied on Chevron in 70 decisions; federal courts considering administrative authority have cited Chevron over 18,000 times. Specifically in the labor and employment context, agencies such as the U.S. Department of Labor, the Occupational Safety and Health Administration, the Federal Trade Commission, and the Equal Employment Opportunity Commission, have heavily relied on and regularly invoked the Chevron Doctrine. With Chevron overturned, courts moving forward will likely be less willing to defer to administrative agencies and more willing to question agency-driven rules.
The Chevron Doctrine directed courts to resolve statutory ambiguities by deferring to an administering agency's reasonable interpretation of the statute in question. The Chevron analysis involved three steps. At Step Zero, the court considered whether "Congress delegated authority to the agency generally to make rules carrying the force of law," and whether the agency "interpretation claiming deference was promulgated in the exercise of that authority." United States v. Mead Corp., 533 U.S. 218, 226-27 (2001). At Step One, the court considered whether Congress directly spoke on the question at issue or whether the statute at issue was ambiguous. Chevron, 467 U.S. at 842. If the answer was "no," then the court and the agency would need to give effect to the "unambiguously expressed intent of Congress." Id. If the answer was "yes," the court would proceed to Step Two and consider whether the agency's answer was "based on a permissible construction of the statute." Id. If all three steps were satisfied, the court was directed to accept the agency's interpretation even if the court would have read the statute differently on its own.
In two separate cases, commercial fishing groups claimed that a federal agency, the National Marines Fisheries Service, exceeded its authority by forcing their fishing vessels to pay the salaries of observers on board. The lower federal courts upheld the agency regulation based on the Chevron Doctrine. The fishing companies then appealed to the Supreme Court and requested that the Court overrule or narrow the Chevron Doctrine.
On June 28, 2024, the Supreme Court overruled its 1984 decision in Chevron v. Natural Resources Defense Council, and held that courts must "exercise their independent judgment in deciding whether an agency has acted within its statutory authority, and courts may not defer to an agency interpretation of the law simply because a statute is ambiguous." Loper Bright Enterprises et al. v. Raimondo, Secretary of Commerce, et al., 603 U.S. ___, 35 (2024). The Court explained that "Chevron's presumption is misguided because agencies have no special competence in resolving statutory ambiguities. Courts do." Id. at 5. The justices explained that by deferring to agency interpretation, the Chevron doctrine "depart[s]" from the understanding that the judiciary alone decides such questions because it requires courts to "ignore, not follow, 'the reading the court would have reached'" if it exercised independent judgment. Id. at 21.
Significantly, Justice Roberts opined that the Court's ruling "do[es] not call into question prior cases that relied on Chevron framework," and that "[t]he holdings of those cases that specific agency actions are lawful [] are still subject to statutory stare decisis despite [the] change in interpretive methodology." Id. at 34. Nevertheless, the Supreme Court's rulings leave the door wide open for ongoing litigation and new legal challenges to administrative authority.
While neither of the cases here dealt with labor and employment law, the Supreme Court's decisions will undoubtedly cause a rippling effect in the labor and employment arena. Over the past several years, agencies, like the Federal Trade Commission and the Department of Labor, have heavily relied on Chevron Doctrine "authority" to issue new rules and regulations for employers to implement and abide by. With the Chevron Doctrine overruled, courts should yield less to administrative agencies' interpretations and start to examine in depth whether the statutes at issue give the administrative agencies authority to promulgate their regulations. With the Supreme Court's decision, we expect federal courts to issue some interesting decisions over the next year.