By Chris Hitchcock, Esq.
The Supreme Court has made another radical departure from well-established law in the case of Loper Bright Enterprises v. Raimondo. The Court overturned the 40-year-old Chevron deference doctrine, which required courts to defer to government agencies’ interpretations of ambiguous statutory language. Federal courts will now have the power to determine the meaning of such language, thereby becoming involved in regulatory policymaking. EPA regulations are expected to be one of the principal targets of challenges brought under Loper Bright.
In Chevron, the Court considered whether the U.S. Environmental Protection Agency (EPA) was authorized to define the meaning of an ambiguous term used in the Clean Air Act. The Court ruled on June 25, 1984, that courts should defer to an agency’s interpretation of ambiguous statutory language provided the interpretation was “permissible.” Under the Chevron deference doctrine, agencies were often successful in defending their statutory interpretations and the regulations issued under those interpretations.
Loper Bright was brought by commercial fishing groups challenging the National Marine Fisheries Services’ (NMFS) interpretation of the 1926 Magnuson-Stevens Fishery and Management Act (MSA), which governs fish conservation in federal waters. Applying Chevron deference, the lower courts determined that NMFS was authorized to issue the challenged rule requiring fishermen to pay government monitors on their vessels under NMFS’ interpretation of the MSA. The Supreme Court’s June 28, 2024, decision reverses the ruling, determining that federal courts should be the party to interpret the MSA’s ambiguous statutory language.
Justice Elena Kagan strongly dissented. “The [Chevron] rule is right.” Agencies have a “detailed understanding of complex and interdependent regulatory programs,” which courts lack. Kagan noted that, since rulemaking can involve policy decisions, “agencies report to a President, who in turn answers to the public for policy calls….” In contrast, courts have no political accountability. “In one fell swoop,” Kagan wrote, “the majority today gives itself the power over every open issue—no matter how expertise-driven or policy-laden—involving the meaning of regulatory law.”
Loper Bright is a victory for regulated entities. It will likely lead to a wave of litigation testing existing regulations on the grounds that they were issued under broad or ambiguous statutory language. Industry lawsuits will undoubtedly focus on abolishing various EPA regulations.
Effect of Ruling
One possible near-term effect involves Securities and Exchange Commission (SEC) rules that require public companies to disclose extensive climate change-related information in their SEC filings. Industry is challenging those rules partly on the grounds that the Securities Exchange Act does not authorize the SEC to issue regulations of this nature. Loper Bright strengthens that argument. If a company is not required to disclose climate impact from its operations, it may reduce actions necessary to curb climate change.
The broad sweep of the Loper Bright opinion creates uncertainty. The Court states that under certain circumstances agency interpretations of statutory language should be given “respect.” Instead of deference, an agency’s interpretation is a factor to be weighed, along with other factors, for a court to interpret ambiguous language in a statute. One circumstance that would cause a court to respect an agency’s interpretation is if the interpretation is consistent with prior agency interpretations of the same statute. However, agencies like the EPA sometimes change statutory interpretations of prior administrations, in which case such revisions may be subject to attack.
The impact on the thousands of prior cases decided based on Chevron deference is also unclear. The Court stated that “mere reliance on Chevron” by itself is not grounds for overruling. Instead, there must be a“special justification” for overruling the prior decision. However, Justice Kagan notes in her dissent that if “special justification was found to overrule Chevron, how hard could it be to find comparable ‘special justifications’ to overrule other cases?” Accordingly, regulations that have been in effect for many years could be struck down. One positive note: Aware that Chevron was under attack, administrative agencies under President Biden reportedly have invoked Chevron only five times in issuing fifty-one major rulings. However, should Donald Trump get elected in November, his administration is likely to offer little resistance to industry’s assault on environmental regulations.