Supreme Court Signals Doubts About Chevron Doctrine

If a key Supreme Court precedent is overturned, employers should be prepared for courts to play a larger role in interpreting federal regulations, with a potential for regional differences across the country.

Two cases determining federal agencies’ authority to interpret laws passed by Congress are before the Supreme Court: Relentless v. Department of Commerce, in which the owners of three fishing companies in Rhode Island and Massachusetts sued to challenge the federal government’s authority to require them to partially pay for federal monitors on their boats, and Loper Bright Enterprises v. Raimondo, which involves the same requirement for fishing companies in New Jersey.

The justices will decide whether to overturn the long-standing Chevron precedent, which holds that when Congress wrote a statute that’s vague, courts should defer to the federal agency applying the law, as long as the agency’s directives are reasonable.

The final ruling could impact the outcomes of employers’ future cases against federal agencies that enforce employment laws, such as the U.S. Department of Labor and the U.S. Equal Employment Opportunity Commission.

“If Chevron is overturned, the courts will be far more involved in determining how statutes should be interpreted,” Joshua Ditelberg, an attorney with Seyfarth in Chicago, told SHRM Online. “It is highly likely that as a result of the Supreme Court’s decisions in these cases, agency actions will be subject to more exacting judicial review.”

The U.S. has 12 federal circuit courts in different regions of the country, so these courts could reach different conclusions if they’re not required to defer to a federal agency’s interpretation when the law is unclear. That could bring challenges for multistate employers.

“As there often are notable differences among the various judicial circuits in their views regarding the administrative state, the ability to obtain judicial review in certain locations will become even more critical,” Ditelberg told SHRM Online. “Empowering the courts to exercise greater review of agency actions means that statutory enforcement could be meaningfully different in different parts of the country.”

Roman Martinez, an attorney with Latham & Watkins in Washington, D.C., representing the fishing companies in Relentless, argued that Chevron undermines the role of the court to say what the law is. “It reallocates interpretive authority from courts to agencies, and it forces courts to adopt inferior agency constructions that are issued for political or policy reasons,” he said. “It mandates judicial bias and encourages agency overreach. And by removing key checks on executive power, it threatens individual liberty.”

He also claimed the Chevron doctrine violates the Administrative Procedure Act, which requires government agencies to publish notices of proposed rules and give the public the opportunity to comment on proposed rules.

However, that theory on the Administrative Procedure Act “is inconsistent with the statute’s history and the way it’s been understood ever since its enactment, including in the more than 70 cases in which this court has relied on Chevron to sustain an agency’s interpretation,” said U.S. Solicitor General Elizabeth Prelogar, representing the U.S. Department of Commerce, in oral arguments.

If the court overturns Chevron, “thousands of judicial decisions sustaining an agency’s rulemaking or adjudication as reasonable would be open to challenge, and that profound disruption is especially unwarranted because Congress could modify or overrule the Chevron framework at any time,” she noted.

Justices React

In oral arguments on Jan. 17, several conservative justices voiced opposition to the Chevron doctrine, saying it gives too much unwarranted power to federal agencies. “The government always wins,” said Justice Neal Gorsuch.

“Chevron itself ushers in shocks to the system every four or eight years when a new administration comes in, whether it’s communications law or securities law or competition law or environmental law,” said Justice Brett Kavanaugh. “That is not stability.”

However, three liberal justices backed the Chevron doctrine because the federal agencies have experience and expertise in their subject area, which the courts do not.

“The entity with all of the qualities, expertise, experience, on-the-ground execution, knowledge of consequences, why shouldn’t deference be given to that entity?” asked Justice Sonia Sotomayor.

Using a hypothetical scenario, Justice Elena Kagan asked whether the court should determine whether a new product designed to lower cholesterol is a drug or a dietary supplement. The Food and Drug Administration regulates drugs and dietary supplements differently.

“My concern is that if we take away something like Chevron, the court will then suddenly become a policymaker by majority rule or not, making policy determinations,” said Justice Ketanji Brown Jackson.

She said determining who should pay for the fishing monitors is a policy question, not a legal one. Without Chevron, “I’m concerned that judges are going to look at all of the questions related to a statute and call them legal,” she added.

The Supreme Court is likely to issue a ruling before the end of June when its current term ends.