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The Future of Regulatory Interpretation: What if the Supreme Court Ends Chevron Deference?

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John Lovett, Senior Manager of Media Research and Data Analytics, Pinkston

Overview

  • The Supreme Court recently heard two cases, Relentless Inc. v. Department of Commerce and Loper Bright Enterprises v. Raimondo, which may lead to overturning of the 1984 case Chevron v. Natural Resources Defense Council.

  • Overturning Chevron could have significant implications for bureaucracy and lawmaking due to its granting of bureaucratic ability to interpret legislation, known as Chevron Deference.

  • An overturning of Chevron would affect the activities of the bureaucracy, Congress, and the courts, shifting interpretive authority over regulations.

  • Companies dealing with government regulations, particularly in newer areas of policy like climate change, cryptocurrency, and artificial intelligence, may face more challenges due to lack of precedence.

  • Companies should consider focusing on legal advocacy and lobbying efforts to ensure priorities are met and accounted for.

On January 17, 2024, the Supreme Court heard arguments in two cases, Relentless Inc. v. Department of Commerce and Loper Bright Enterprises v. Raimondo, cases that, despite not being about the most exciting of topics, may have major ramifications for rulemaking and law interpretation in the United States bureaucracy. The case is focused on a simple question: whether to overturn the ruling in the 1984 case Chevron v. Natural Resources Defense Council, a ruling that set the stage for administrative law interpretation within the bureaucracy. As court watchers assume that the Court will likely throw out the Chevron ruling, it is important for those both within and outside of government to understand the ramifications of a decision.

This piece will explain both what the current cases and Chevron are, as well as the Chevron Deference principle that came from the Chevron case. In addition, we will explore what may happen if Chevron deference is overturned, and the ramifications the overturning may have not only for the bureaucracy itself, but also experts and other parties involved.

What are Relentless and Loper?

The cases Relentless Inc vs. Department of Commerce and Loper Bright Enterprises v. Raimondo deal with similar issues related to fisheries and interpretations related to fishing vessels. In both cases, the focus is on the federal observer requirements in the Magnuson-Stevens Fishery Conservation and Management Act. The New England-based fisheries argue that federal observers on-deck to prevent overfishing should not be paid by the fishing companies themselves, an interpretation of Magnuson-Stevens by the Department of Commerce. The two cases have been linked together (and Relentless fast-tracked) due to the recusal of Justice Ketanji Brown Jackson from the Loper case due to her prior hearing of Loper at the DC Circuit Court.

What is Chevron v. National Resources Defense Council, and what is Chevron Deference?

Chevron v. National Resources Defense Council is a landmark 1984 Supreme Court case related to advocacy group National Resources Defense Council’s original lawsuit against the Environmental Protection Agency over its interpretation of the Clean Air Act and the source of emissions, and Chevron (as an affected party), appealing the DC Circuit’s decision to the Supreme Court. In a 6-0 unanimous ruling [1], the Court sided with Chevron, arguing that Congress had delegated to the EPA the ability to interpret the Clean Air Act through its passage, and (contrary to the DC Circuit’s ruling), the courts should not be in the business of making government policy on air emissions.

The Chevron Deference is the judicial principle defined from the Chevron case. By allowing the Environmental Protection Agency to interpret words in congressionally-passed law, courts would defer to and allow agencies to interpret vagueness in law based on expertise, letting the bureaucracy interpret as issues change and develop.

Why is Chevron Deference so important to bureaucracy and lawmaking?

Chevron gives agencies the ability to interpret law in the form of administrative law. While members of Congress do build expertise in law as they work in the halls of the U.S. Capitol, they are not experts in the nuances of each and every topic area they may have to deal with. Therefore, they likely do not have the ability to craft every piece of law to the level that would satisfy specific situations and nuances. As a result, law can be vague and interpreted. A key piece of Chevron is who should be doing that interpretation. As of now, that interpretation is usually deferred to the bureaucracy through Chevron, which allows agencies (through their expertise) to determine the interpretation of law.

Importantly, it is important to remember that there is also at times a contrast between appointed officials and bureaucrats. Appointed officials overseeing bureaucratic agencies are appointed by the President and confirmed by the Senate, and serve at the discretion of that President (depending on agency independence). While it is not unheard of for appointees to hold jobs across administrations, it is unlikely that appointed officials will stay for more time than their President (especially if the White House changes hands).

At the same time, bureaucrats serve in their jobs across administrations, at times being in place for decades. This has the potential to create friction, or drift, based on the priorities between appointees and bureaucrats, leading to some consistency in policy as bureaucrats interpret based on previous mandates.

What are the main arguments against Chevron Deference?

One of the primary arguments made against Chevron was echoed by Justice Brett Kavanaugh in his questioning to counsels during Oral Arguments on the Relentless case, asking whether deference “ushers in shocks to the system every four or eight years when a new administration comes in.”

In addition, others have argued that Chevron deference gives agencies a rubber stamp to entirely change policies at a whim, without oversight from federal bodies, including the courts, which, as The Washington Post’s George Will has argued, has “is a perpetual thumb on the scale, favoring today’s swollen executive.”

What would be the ramifications of the end of Chevron Deference for the government?

For one, the end of the Chevron deference would significantly increase the caseload and time for the lower courts. As Harvard Administrative Law Professor Jody Freeman notes, “Without Chevron, federal judges may get bogged down in intricate questions of statutory interpretation which require scientific, economic, or technological expertise.” In addition, interpretation may end up being revised on the basis of the court in question.

Another consideration on the judicial end is the nature of the court itself. There are 13 federal judicial court systems, 94 district courts, along with a series of administrative and specific courts. It is very likely that the interpretation that courts will give for law will depend heavily on the court that receives the case, with a court like the 9th or DC Circuit generally viewed as more liberal ideologically, while the 5th is seen as particularly conservative, especially as district and federal appointments have become more partisan-focused. As the National Resources Defense Council (who, coincidentally, were the party suing over EPA regulations in the 1980s) note, “Ending Chevron deference would be tantamount to throwing a dart at a lower-court dartboard…and hoping for the best.”

Congress would also face pressure to become involved, as the need to dive into legislation may come at a time when the body is unprepared for the onslaught of regulatory decision-making. As Foundation for American Innovation Executive Director Zach Graves argues, increased complexity in regulations increased as staff capacity on committees decreased, meaning that reshaping administrative matters could involve a legislative body without the ability to effectively do that reshaping. George Will further discusses the congressional role, noting that the body would have to spend more time on administrative policy in a post-Chevron world. With a highly divided and highly partisan Congress, there may be difficulty coming to consensus on policy, slowing down the process.

What would be the ramifications for companies that deal with government regulation?

For companies that deal with government regulation, immediate activity will not be present, but as Bloomberg Legal Analyst Kate Azevedo points out, there will likely be more challenges to agency interpretations, with Azevedo noting both the Departments of Health & Human Services and the Department of Labor as likely agencies to be challenged on interpretation. Azevedo also points out that burgeoning regulation in three areas in particular may become particularly important due to their technicality, namely climate change, cryptocurrency, and artificial intelligence. While interpretation would likely be more stable over time, the end of Chevron would likely impact new industries by drawing out the administrative law process further, leaving questions as to what policy really is in these new industries.

For these industries from a communications standpoint, regulations may end up depending on a combination of lawsuits and congressional action, leading to the need to increase focus on both legal activities (lawsuits, amicus filings on suits) and lobbying activity, whether individually or through a coalition. While direct communication with the public would not be as necessary due to the minutiae involved, communicating with legal bodies and lawmakers will become that much more important.

In general, a post-Chevron regulatory structure will look significantly different from what we have seen over the last 40 years. The question will be whether the Court looks to amend, or outright throw out, the 1983 ruling.


If you have any questions, please reach out to john.lovett@pinkston.co.



[1] Three justices did not take part in the ruling: Justices William Rehnquist and Thurgood Marshall declined due to illnesses on the date of oral arguments, and Justice Sandra Day O’Connor due to a financial stake in a trust following the death of her father.