Supreme Court Further Curtails Power of Administrative Agencies
On June 28, 2024, in Loper Bright Enterprises v. Raimondo, the Supreme Court overruled the 40-year-old precedent set in Chevron v. Natural Resources Defense Council. In Chevron, the Court had ruled that when administrative agencies implement ambiguous statutory provisions, courts must defer to the agency’s interpretation as long as it is reasonable. Loper Bright extends the Court’s recent trend of limiting the power of administrative agencies to regulate as they see fit and its continued overturning of significant precedents. This decision opens the door to a flurry of new cases challenging agency interpretations of statutory provisions that likely would have received deference under Chevron.
Administrative, or regulatory, agencies are located in the Executive Branch of the federal government and are tasked with implementing statutes within their purview passed by Congress. These agencies—such as the Securities and Exchange Commission, Federal Trade Commission, and Environmental Protection Agency, among others—cover a wide range of areas.
In Loper Bright, the Supreme Court ruled that “Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority.” This ruling was based on the power of judicial review set out in Marbury v. Madison in 1803, which provided “[i]t is emphatically the province and duty of the judicial department to say what the law is.” The Court reasoned that statutes dealing with regulatory agencies are no different than other types of statutes, where “courts use every tool at their disposal to determine the best reading of the statute and resolve the ambiguity. . . . It therefore makes no sense to speak of a ‘permissible’ interpretation that is not the one the court, after applying all relevant interpretive tools, concludes is best.” In addition, the Court based its ruling on its interpretation of the Administrative Procedure Act (APA), which sets out the procedures that apply to administrative agencies. The Court ruled that the APA’s provision for judicial review of agency action codifies “that courts, not agencies, will decide ‘all relevant questions of law’ arising on review of agency action” and “set aside any such action inconsistent with the law as they interpret it.” Lastly, the Court explained why the principle of stare decisis—or adherence to precedent—did not preclude overruling Chevron, including the majority’s view that Chevron’s reasoning was flawed and that it was “unworkable” in practice.
Justice Elena Kagan penned a forceful dissenting opinion, joined by Justices Sotomayor and Jackson, that she took the unusual step of summarizing from the bench to emphasize the extent of her disagreement with the majority’s decision. She explained that the Court’s decision “will cause a massive shock to the legal system, ‘casting doubt on many settled constructions’ of statutes and threatening the interests of many parties who have relied on them for years.” In addition, she explained that Chevron made sense because:
Some interpretive issues arising in the regulatory context involve scientific or technical subject matter. Agencies have expertise in those areas; courts do not. . . . And some present policy choices, including trade-offs between competing goods. Agencies report to a President, who in turn answers to the public for his policy calls; courts have no such accountability.
Moreover, Justice Kagan criticized the majority for putting “courts at the apex of the administrative process as to every conceivable subject,” such as on issues related to climate change, health care, the financial system, transportation, and artificial intelligence. She cautioned: “In every sphere of current or future federal regulation, expect courts from now on to play a commanding role. It is not a role Congress has given to them, in the APA or any other statute. It is a role this Court has now claimed for itself.”
Justice Kagan explained that deferring to the reasonable interpretations of agencies is consistent with the judicial power to interpret the law because Chevron was simply based on a “presumption—really, a default rule—for what should happen” when a statute is ambiguous: that “Congress would select the agency it has put in control of a regulatory scheme to exercise the ‘degree of discretion’ that the statute’s lack of clarity or completeness allows.” Justice Kagan noted that “presumptions of this kind are common in the law,” that the APA’s provision for judicial review does not specify what standard of review should be applied, and Chevron deference does not contradict “how judicial review operated in the years leading up to” and following the enactment of the APA.
Furthermore, Justice Kagan was highly critical of the majority’s failure to adhere to stare decisis. She explained that far from being the type of situation that warrants overruling, “Chevron is entitled to a particularly strong form of stare decisis” because “Congress has kept Chevron as is for 40 years” despite having had ample opportunity to limit it, the case has been cited in over 18,000 federal-court decisions, and it has had a “powerful constraining effect on partisanship in judicial decision-making.”
Rather, Justice Kagan described the decision as rooted in “the majority’s belief that Chevron . . . gave agencies too much power and courts not enough. But shifting views about the worth of regulatory actors and their work do not justify overhauling a cornerstone of administrative law. In that sense too, today’s majority has lost sight of its proper role.”
Justice Kagan placed the Court’s decision in the pattern of its recent “treatment of agencies” and “its treatment of precedent.” The decision was “yet another example” of “the Court’s resolve to roll back agency authority, despite congressional direction to the contrary.” Another example came just this term in SEC v. Jarkesy, where the Court ruled that the SEC’s use of in-house tribunals—as opposed to courts—to seek civil penalties from defendants for securities fraud is unconstitutional. As for stare decisis, Justice Kagan cited her “own dissents to this Court’s reversals of settled law” that “by now fill a small volume”—including the Court’s overruling of Roe v. Wade in Dobbs v. Jackson Women’s Health Organization. Justice Kagan therefore described the majority’s decision as a case where a “rule of judicial humility gives way to a rule of judicial hubris. In recent years, this Court has too often taken for itself decision-making authority Congress assigned to agencies.”
Loper Bright portends an onslaught of new cases challenging how agencies implement federal statutes, where judges will exert independent review and not be required to defer to expert agency interpretations of statutory ambiguities. There are, however, several important limitations to the Court’s decision. The majority stated that prior decisions cannot now be overruled merely because they relied on Chevron. (Justice Kagan, however, was concerned that “Courts motivated to overrule an old Chevron-based decision can always come up with something to label a ‘special justification’” to support overruling. “All a court need do is look to today’s opinion to see how it is done.”)
In addition, Loper Bright applies only where a statute is deemed to be ambiguous, but not where a court determines that the statute itself is clear. The decision also does not apply to agency policymaking and fact-finding, which are still accorded substantial deference. Moreover, this decision applies only where the statute is silent as to who should interpret the provision at issue. Congress may still expressly delegate to administrative agencies the power to interpret statutory provisions. These qualifications may be of little comfort to regulators—and the public that relies on them—in cases where newly empowered courts reject agency interpretations that would have been deemed reasonable under Chevron. Even so, agencies may try to alleviate such results by providing as fulsome explanations as possible for their decisions, Congress may try to do so through the legislative process, and litigants may marshal arguments as to why a court should adopt an agency’s interpretation as the best understanding of the statute at issue.