Agencies and Regulated Community Brace for Changes in Administrative Law and a Potential “Flood of Litigation”

Agencies and Regulated Community Brace for Changes in Administrative Law and a Potential “Flood of Litigation”

Recent oral argument before the Supreme Court of the United States has raised significant questions concerning the Chevron doctrine, a 40-year-old ruling that requires federal courts to defer to an agency’s reasonable interpretation of certain statutory provisions that Congress charged the agency with implementing. Because a majority of the Supreme Court appears inclined to overturn or at least modify that doctrine, many in the regulated community are bracing for potentially significant changes in the administration of regulatory law. Still others are warning that there may be a “flood of litigation” seeking to overturn prior decisions that relied on the doctrine. The Supreme Court’s decision on the issue is expected before July 2024.

Chevron History and the Debate

The doctrine of Chevron deference was first announced by the Supreme Court in 1984 in the matter Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 83. Pursuant to the doctrine, if Congress charges an agency with implementing a statute, and that statute is silent or ambiguous with respect to a specific issue, the court should defer to an agency’s reasonable interpretation of the statute as it pertains to that issue.

Proponents of the doctrine claim it fosters separation of powers because interpretation of an ambiguous statute “requires the formulation of policy.” If Congress explicitly or implicitly delegated policymaking authority to the agency, the court should defer to the reasonable judgment of the agency rather than imposing its own policy preferences. According to proponents of the doctrine, agencies are better suited to make such policy decisions because they are viewed as experts in their particular field and they are accountable to an elected president.

Opponents of Chevron, however, claim the opposite. They claim Chevron should be overturned because the doctrine violates Article III of the Constitution and the power of federal judges to interpret the law. According to them, Chevron has for years been wrongly treating legal questions as policy questions and reallocating judicial authority to the agencies. Opponents argue that, in cases where an agency is not involved, there is no question that the court has the duty to interpret ambiguous statutory provisions. Absent an express delegation of that duty to the agency, the same analysis should apply in cases where an agency is involved.

Proponents and opponents of the doctrine similarly differ on whether Chevron promotes or destroys uniformity in the law. Proponents of the doctrine claim Chevron promotes uniformity by having a singular entity―the agency―decide on the appropriate implementation of a statute. Absent Chevron, such decisions would be subject to disputes among the lower courts, creating different rules in different parts of the country for regulated parties. Opponents claim Chevron facilitates “flip-flopping,” with agency rules being subject to change each time a new administration is ushered into office.

Recent Supreme Court Argument

It appears the Supreme Court is poised to overturn or modify the application of Chevron deference. On January 17, 2024, the Court heard oral argument in two cases, Loper Bright Enterprises, Inc. v. Raimondo and Relentless Inc. v. Department of Commerce, which challenge a National Marine Fisheries Services (NMFS) rule implemented under the Magnuson-Stevens Act. The act authorizes the NMFS to require fishing vessels to carry federal observers but it is silent on the issue of whether those vessels should be required to pay the salaries of the observers. The NMFS promulgated a rule that required the vessels to pay these salaries. Plaintiffs brought suit claiming the rule exceeded NMFS’s statutory authority. Applying the Chevron deference, the district courts in each case upheld the rule and the circuit courts affirmed. The Supreme Court granted certiorari to decide whether it should overturn or modify the doctrine of Chevron deference.

During three and a half hours of oral argument, Justices Neil Gorsuch, Samuel Alito and Brett Kavanaugh all appeared to favor overturning Chevron with comments supporting the notion that Chevron violates that traditional separation of powers, impermissibly tilting the balance of power to the executive branch, and that application of the doctrine fosters instability by allowing changes “every four to eight years when a new administration comes in.” Comments from Justices Elena Kagan, Sonia Sotomayor and Ketanji Brown Jackson, on the other hand, appeared to be in favor a decision that will preserve Chevron, commenting, inter alia, that deference to the implementing agency most aligns with congressional intent. Chief Justice John Roberts and Justices Amy Coney Barrett and Clarence Thomas were more difficult to read, expressing reservation about overturning the doctrine, particularly whether it would “invit[e] a flood of litigation.”

Implications for Overturning or Modifying Chevron

In the event Chevron is overturned, one of the biggest unanswered questions is the fate of prior regulations and decisions that relied upon the doctrine. Petitioners in Loper and Relentless argued that, under principles of stare decisis, prior decisions likely would remain intact, since the ultimate holding in those cases was the agency’s action was lawful. Moreover, if the Court decides to overturn Chevron, it could fashion a prospective ruling that leaves any past decisions in place. Not all of the justices appeared mollified by petitioners’ response to these concerns.

Obviously, it remains to be seen whether the Court will overturn, modify or affirm Chevron. However, most commentators agree that some change is in the cards, and any change is likely to usher in a period of uncertainty and challenge―especially for more complex and detailed regulatory programs, such as those implemented by the Centers for Medicare and Medicaid Services, Environmental Protection Agency, Food and Drug Administration, Department of Health and Human Services, Consumer Product Safety Commission, Federal Trade Commission, Board of Immigration Appeals and Internal Revenue Service, to name just a few.

Congressional Oversight of Rulemaking

While the Supreme Court is grappling with questions of Chevron deference and separation of powers, in Congress, a group of lawmakers is considering options to expand congressional oversight of rulemaking by the executive branch. On January 9, 2024, the Government Accountability Office issued a revised report, “Options for Enhancing Congressional Oversight of Rulemaking and Establishing an Office of Legal Counsel,” that evaluates options for enhanced oversight of agency action, including creating a new Congressional Office of Regulatory Review. That report warns that increased congressional oversight of agency rulemaking will likely carry burdens of increased costs, inefficiencies and duplication of efforts.

For More Information

If you have any questions about this Alert, please contact Sharon Caffrey, Lindsay Brown, any of the attorneys in our Trial Practice Group or the attorney in the firm with whom you are regularly in contact.

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

Proudly powered by WordPress