Authors: Danelle Heathman Lars Gustafson
To understand the potential side effects of the demise of the Chevron deference, one must first understand why federal courts have used the Chevron doctrine for nearly 40 years to defer to an agency's reasonable interpretation of an ambiguous statute as well as why, after 40 years, this historic case has been cast aside.
The rise of the Chevron deference
The Chevron deference arose from a landmark case in 1984 (Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. 468 US837), in which the Supreme Court held that "It is a principle of administrative law courts to defer to interpretations of statues made by those government Agencies charged with enforcing them, unless such interpretations are unreasonable."
We'll break this down into two parts, since it actually consists of a two-part test.
- Part one considers whether Congress has spoken directly to the precise issue at question or is silent and ambiguous.
- Part two is based on the silent and ambiguous determination. If yes, then whether the agency's answer is based on a permissible construction of the statute, the agency's policy is enforced even if the court doesn't believe it's the best interpretation of the statute. The idea is that agencies, rather than courts, should be making policy judgments.
Again, federal courts have relied upon the Chevron deference, also known as the Chevron doctrine, for nearly 40 years to defer to an agency's reasonable interpretation of an ambiguous statute.
The difference between policy and law
One of the key differences between the traditional roles of government agencies and the courts is that agencies have typically been relied on to make policy judgments, whereas courts have been authorized to enact law. So where is the line drawn? At times it can be difficult to delineate, even for the courts. It's good to take a moment to reflect on just what constitutes law vs policy. A very basic understanding would be that when we think of laws we think of formal, enforceable rules established by a governing body that regulates certain behaviors and has the authority to impose penalties for noncompliance, whereas policies are guidelines or principles set by organizations or agencies to shape decision-making and to achieve specific, actionable goals.
The demise of the Chevron deference
On June 28, 2024, the US Supreme Court overturned the regulatory landscape as we know it when they ruled on the following cases: Relentless v. Department of Commerce and Loper Bright Enterprises v. Raimondo. Their rulings upended the Chevron deference doctrine, thereby reversing a core assumption that agencies rather than courts should be making policy judgments necessary to fill in statutory gaps or adapt or apply the statute to new facts and/or circumstances.
Both cases challenged the Chevron doctrine and were resolved in favor of overturning the Supreme Court's prior holding. Further, they cite the role of judiciary both historically and specifically under the Administrative Procedure Act (APA) to interpret the law with no special deference to an agency's interpretation. Hence the courts should exercise their independent judgment when interpreting statutes even if the statute involves technical subject matter.
What was the point of Loper Bright?
Loper Bright involved an agency interpretation of an environmental statute (a commercial fishing regulation by the National Marine Fisheries Service). It emphasizes that courts, not executive agencies, have the authority and responsibility to interpret federal statutes.
Moving forward, courts will independently review and interpret federal statutes. They'll decide on the best interpretation of law even where numerous sensible and reasonable interpretations may exist. This change could result in frequent legal challenges and, ultimately, invalidation of government agencies' interpretations of laws and related regulatory actions.
Does this decision mean that agency interpretation is moot?
No, because courts can always consider an agency's interpretation. It may be that an agency's interpretation may be especially informative to the extent it rests on factual premises within the agency's expertise. However, the courts must exercise independent judgment in determination of statutory provisions. One exception pertains to agencies: When a particular statute delegates specific authority to an agency to act consistently with constitutional limits, the agency can interpret statutory ambiguity and act within the scope of authority granted. However, caution has been expressed that courts must respect the delegation, while ensuring that the agency acts within it.
What about ambiguities? Who interprets those?
Congress is tasked with enacting federal laws, and courts are responsible for interpreting those statutes.
Loper Bright makes clear that ambiguities in federal statutes aren't invitations for agencies to supply their own interpretations.
If it's the intention of Congress for agencies to facilitate regulations, Congress will then need to clarify statutes or erect new statutes to counteract the effect of the new Supreme Court holding. Where agency expertise is essential for the implementation of a statute, Congress could provide specific delegation of authority to agencies.
What could this decision mean for agency rulemaking?
Agencies may be less likely to implement policies not clearly or specifically founded in a statute. They'll no doubt face stricter judicial review and thus may find restraint in adopting regulations that Congress either didn't anticipate or didn't address.
With that said, it's good to remember that Loper Bright preserves the ability for courts to consider an agency's view when determining the best interpretation of a particular statute. This ability was set forth in the Supreme Court's 1944 Skidmore v. Swift decision and affirmed in Loper Bright. The persuasiveness of an agency's interpretation will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements and all those factors which give it power to persuade, if lacking power to control.
Thus, we should anticipate agencies to more thoroughly develop their own interpretive bases in informal guidance, rules and regulations in an effort to influence courts' interpretive processes.
We're also likely to see continued and perhaps increased input from agencies in the legislative process where they see appropriate opportunities.
It's routine for agency staff to assist legislators in drafting bills related to subjects the agency is charged with administering.
How does the decision affect the marine industry?
The demise of the Chevron deference doctrine could have profound effects on the US marine industry. Here are some areas we're closely watching.
- Regulatory challenges. The marine industry may see an increase in legal challenges to regulations, as the courts will now rely on their own interpretation of the law.
- Jones Act reinterpretation. The Jones Act, which regulates maritime commerce in US waters and between US ports, could be subject to reinterpretation, potentially affecting domestic shipping operations.
- Environmental compliance. There could be changes in how environmental compliance is enforced, with a possible increase in litigation over regulations that govern marine pollution and emissions.
- Marine safety and security. Safety and security regulations in the maritime sector might be more frequently contested, leading to a potential overhaul of existing standards.
- Stakeholder coordination. The industry will need to carefully coordinate stakeholders to shape future rulemaking and bring appropriate challenges.
Agencies such as the US Coast Guard, US Maritime Administration and US Customs and Border Protection should be braced for challenges for years to come, as these agencies' decisions are based, at least in part, on statutory interpretations.
Overall, the end of Chevron deference is likely to lead to a period of uncertainty and transition for the marine industry, with a need for careful navigation of the new legal landscape. This transition could result in a reevaluation of long-standing practices and regulations and require increased vigilance from industry participants to ensure compliance and influence future regulatory developments.
