The United States Supreme Court’s recent decision to overturn 40-year-old legal precedent will have a profound impact on how federal agencies — including those regulating workplace health and safety matters — are able to function.
In a landmark 6-3 opinion in Loper Bright Enterprises v. Raimondo, the Court fundamentally shifted the balance of power back to the courts from federal agencies. The majority opinion, authored by Chief Justice John Roberts, overruled the Court’s 1984 decision in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. establishing the principle of judicial deference to administrative agencies' interpretations of ambiguous statutes.
The Loper Bright opinion, which is a consolidated decision from two separate lawsuits against an administrative rule issued by the National Marine Fisheries Service, holds that lower courts may not defer to an agency's interpretation of a statute merely because it is ambiguous. Instead, courts “must exercise their independent judgment in deciding whether an agency has acted within its statutory authority” and “use every tool at their disposal to determine the best reading of the statute.”
For the last 40 years, the Chevron doctrine has generally required courts to defer to agency interpretations of the statutes those agencies administer — even when the reviewing court reads the statute differently. Chevron required courts to use a two-step framework to interpret statutes administered by federal agencies. A reviewing court was first required to assess “whether Congress has directly spoken to the precise question at issue.” If congressional intent was “clear,” that was the end of the Court’s inquiry. But, if the court determined that “the statute [was] silent or ambiguous with respect to the specific issue” at hand, the court was required to defer to the agency's interpretation if it was “based on a permissible construction of the statute.”
In Loper Bright, however, the Court emphasized that the Chevron framework was unworkable due to its inconsistent application and the judicial obligation to interpret the law independently. The decision underscored that under the Administrative Procedure Act — the law that governs the process by which federal agencies develop and issue regulations — courts, not agencies, will decide “all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action.”
Understanding the significance of the decision, the Court expressly noted that by overruling Chevron, it does not seek to overturn prior cases that relied on its framework. Regardless, the shockwave of this opinion will impact all corners of federal agencies and the industries they govern. The decision is likely to open the floodgates to a flurry of litigation challenging recent and newly issued federal agency regulations based on their interpretation of federal statutory law.
For decades, the Chevron doctrine was a foundation of administrative law and provided myriad presidential administrations flexibility to interpret statutes via agency adjudications and rulemaking. The Loper Bright decision will significantly alter the landscape of administrative law, reducing the power of federal agencies by requiring courts to engage in more rigorous review of agency interpretations of statutes.
Takeaway for Employers
For employers, this decision will significantly impact efforts of federal agencies such as the EEOC, OSHA, and Wage and Hour Division of the Department of Labor. In fact, the same day the Loper Bright opinion was issued, a Texas federal court cited the new precedent in blocking the Biden administration from enforcing the DOL Wage and Hour Division’s new overtime rule against Texas as a public employer. Read this Employers Council article for more information.
Ultimately, it will take years to understand the long-term impact the Loper Bright decision will have on federal agencies. As partisan politics continue to hamstring the federal government, it is unlikely for Congress to enact legislation filling statutory gaps anytime soon. As a result, the decision is likely to tie up federal agencies as they spend more time attempting to craft regulations to attempt to withstand judicial scrutiny or take more direct enforcement actions to enact policy changes.
For assistance in understanding how the Court’s decision may impact your business or industry, Consulting and Enterprise members are encouraged to contact Employers Council.
Drew Hintze is an attorney for Employers Council.