The U.S. Supreme Court overruled the Chevron deference doctrine for administrative agencies in Loper Bright Enterprises vs. Raimondo issued Friday, June 28, 2024. This ruling eliminates the deference Courts provide to administrative agencies’ rules and regulations when determining if they are valid. Now, under Loper, Courts must follow the Administrative Procedure Act which governs the process by which federal agencies develop and issue regulations. Courts must now “exercise independent judgment in determining the meaning of statutory provisions.” Administrative agencies must prove their rules and regulations are consistent with the statute they are trying to implement rather than enjoying a presumption the agencies’ interpretation of a rule was correct.
Old Chevron Standard
Under Chevron, issued in 1984, has two steps. First, if there was a clear requirement in the statute, then apply congressional intent. Second, If the intent is ambiguous, the Court should defer to the agency’s interpretation if it was reasonable. This lead to the majority of cases upholding administrative agencies actions.
New Loper Standard
The new standard in Loper eliminates deference to the administrative agencies interpretation and requires Courts to “exercise their independent judgment in deciding whether an agency is acting within its statutory authority, as the [Administrative Procedure Act] APA requires” and “may not defer to an agency interpretation of the law simply because a status is ambiguous.” This reversal of the “Chevron deference” regarding the standard of review of administrative rules will make it easier for companies to challenge the agency’s rules and regulations.
Facts
In Loper, Congress passed the Magnuson Stevens Fishery Conservation and Management Act (“MSA”) requiring fishing vessels to have federal monitors onboard to enforce the agency’s regulations regarding overfishing. At first the cost was paid by the government. The statute did not specifically require Atlantic herring fisheries to pay the costs of federal monitors. Due to budget constraints, the National Marine Fisheries Service (“NMFS”) was not able to monitor all fisheries. The cost was then passed to the private corporations through an administrative rule even though this was not authorized by the statute.
Loper filed a Complaint arguing MSA did not authorize NMFS to require companies to pay for the monitoring. The Trial Court dismissed the Complaint based on the Chevron deference. The Court of Appeals affirmed. The Supreme Court then reversed the Trial Court decision, overturned Chevron, and eliminated the deference to administrative agencies.
Trial courts will now apply the arbitrary or capricious test in Section 706(2)(A) of the APA. If an administrative agency’s rule is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law”, the Court will invalidate the agency’s actions.
Impact
The Loper decision is likely to assist with deregulation efforts by companies making it harder for a Government Agency to support its regulations. The Loper decision will impact regulation and rules from the trucking (FMCSA and 49 CFR), environmental (EPA) food (FDA), workplace safety (OSHA) overtime and independent contractor status (Department of Labor), health care (ACA and Medicare rules) unions (NLRB) employment discrimination (EEOC) and non-compete clauses (FTC) among others. With the elimination of “deference” to the Administrative Agencies regulations, companies now have an even playing field when challenging regulations.
Please reach out to a member of Reminger’s Trucking and Commercial Transportation Practice Group for more information.
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