Decision Alert: Supreme Court Overrules Chevron, Holds that Courts Need Not Defer to Agency Interpretations of Ambiguous Statutes

On June 28, 2024, the Supreme Court held in Loper Bright Enterprises, Inc. v. Raimondo, Sec. of Commerce, et al., that courts must exercise independent judgment and not simply defer to an agency’s interpretation of an ambiguous statute—overruling the landmark case Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 468 U.S. 837 (1984). The result was predicted by Chantel Febus, Dykema’s Head of East Coast Appeals, and James Azadian, Co-Leader of the firm’s Appellate & Critical Motions Practice, right when news broke of the Supreme Court’s decision to review the matter. Chief Justice Roberts authored the opinion. Justices Thomas and Gorsuch filed concurring opinions. Justice Kagan dissented, joined by Justice Sotomayor and in part by Justice Jackson.

As summarized in Dykema’s February 2024 edition, the Magnuson-Stevens Fishery Conservation and Management Act—which regulates the Atlantic herring fishery and helps promote conservation while reducing overfishing—set up a council to oversee the Atlantic herring fishery. Under the Act, the National Marine Fisheries Service (Service) required commercial fishing boats to allow federal agents (or Monitors) to come along on fishing expeditions to collect data and prevent overfishing. The Service has interpreted the Act to allow it to require the fishing vessel to pay for or subsidize the salaries of these Monitors. A group of fisheries, including the petitioner, challenged this cost-shifting program, arguing that the Service’s interpretation of the Act is wrong and should not be given judicial deference under Chevron. The D.C. Circuit affirmed the district court’s ruling, concluding that the Service’s interpretation is entitled to deference because of the Act’s ambiguity regarding the source of payment for the Monitors. The Supreme Court disagreed.

The Court granted certiorari to consider whether to overrule Chevron, or at least clarify that statutory silence is not statutory ambiguity that requires judicial deference to an agency. Addressing both questions, the Court held that Chevron’s deferential standard violated the independence of the judiciary. Writing for the majority, Chief Justice Roberts recognized the long-standing history of Article III courts looking to the Executive Branch for interpretations of federal statutes, especially if the Executive’s interpretation was issued alongside the statute’s enactment. However, Article III judges were not bound by those interpretations because the Constitution promotes an independently functioning Judicial Branch. The Court explained that Chevron “is unworkable” because the concept of ambiguity is not definite and may have different meanings in different courts. The Separation of Powers principles required that the judiciary exercise independent judgment when deciding whether an agency has acted within its statutory authority.

In a concurring opinion, Justice Thomas wrote that the Chevron doctrine improperly stripped courts of their judicial power and increased the power of executive agencies. In his concurrence, Justice Gorsuch argued that stare decisis required overturning Chevron because, since its founding, the Court’s duty has been to resolve cases and controversies without any bias toward any agency.

In dissent, Justice Kagan expressed the view that agencies are better equipped to interpret certain statutes because they are experts in their respective fields, and that Chevron properly respected that allocation of responsibility. Justice Kagan admonished that the decision will “cause a massive shock to the legal system” because the long-settled interpretations of various statutes have been consistently relied on for years by individuals, industries, and agencies alike.

Takeaways

• Courts are no longer required to defer to agencies’ interpretations of ambiguous statutes. In Chief Justice Roberts’s words, “Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority.”
• Businesses will have more opportunities to successfully challenge agency regulatory enforcement as invalid exercises of agency authority.
• This decision will have far-reaching implications for virtually every regulated industry, with potentially seismic impacts for businesses subject to environmental, climate, transportation, manufacturing, healthcare, securities, and energy regulation.

For more information, please contact Chantel Febus, James Azadian, Cory Webster, Brandy Manning, Jason Hanselman, or Christopher Sakauye.