The Supreme Court Giveth and the Supreme Court Taketh Away
Courts, not administrative agencies, must decide what Congress means when it gives agencies authority to act. Individuals now have more time to challenge agency rules.
On June 28, 2024, the United States Supreme Court issued its decision in Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (June 28, 2024), and in the words of Justice Gorsuch in his concurring opinion, the Court “place[d] a tombstone on Chevron no one can miss.” Loper Bright overruled “Chevron Deference,” the longstanding doctrine from the Court’s watershed decision in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984). Chevron has been cited in more than 7,000 federal cases. At the core of Chevron Deference was the idea that, for agencies to effectively regulate within their areas of responsibility, they must have the freedom to establish reasonable rules when Congress has not provided specific guidance on how to carry out agency authority.
Examples of how agencies exercise their discretion include the Department of Transportation’s regulations concerning air traffic safety, highways, freight transportation, and speed limits; the FDA’s regulations governing food safety, medical devices, and new drug therapies; the Treasury Department’s seemingly innumerable federal tax regulations; and the EPA’s complex environmental regulations. Congress authorized these agencies to regulate in their particular subject areas but left it up to the agencies to fill in the details of the law through the rulemaking process. For four decades, federal regulators have freely interpreted statutes, promulgated binding regulations, and issued guidance that governed the industries that influence much of our daily lives—health care, banking, investments, medicine, and food, to name a few.
Under Chevron, if Congress had not spoken directly to the precise issue in question, a court would defer to an agency’s interpretation of a statute when the statute was ambiguous and the agency’s interpretation was not unreasonable. The Supreme Court’s new decision does not prohibit federal agencies from acting within their authority, but if there is a legal challenge to agency action, the courts will no longer simply accept the agency’s reasonable interpretation of its authority as the law. Instead, courts will decide what Congress intended and whether the challenged action comports with that intention.
We are in a new era in which courts will serve as the final arbiters of statutory interpretation, as Chief Justice Roberts and the Court’s majority determined was intended by the Administrative Procedure Act (APA). In his majority opinion, Justice Roberts declared, “This Court has not deferred to an agency interpretation under Chevron since 2016.” But because Chevron was still “good law” (that is, not overturned by the Supreme Court), the lower courts continued to defer to agencies’ judgments. Emphasizing that “[i]t is emphatically the province and duty of the judicial department to say what the law is,” the majority opinion held that “Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the APA requires.” The Court’s majority further addressed the conflict between the Chevron doctrine and the APA, stating that “courts need not and under the APA may not defer to an agency interpretation of the law simply because a statute is ambiguous.”
Some regulated industries are likely to benefit from overturning Chevron.
Plaintiffs in regulated industries who have long decried agencies’ regulatory overreach now have a new opportunity to challenge agency regulations. Litigants will no longer be required to argue that the statute in question is ambiguous and that the agency’s interpretation is unreasonable. Instead, litigants need only convince the court that their interpretation, not the agency’s, is correct (that is, what Congress intended). As a result, the courts will likely see a wave of new litigation challenging federal rules as being beyond the agency’s statutory authority. To avoid litigation, agencies will likely be much more careful in characterizing their new rulemakings as within the words of the authorizing statute. Agencies may also try to avoid legal challenges to their rules by limiting the scope of their rulemaking proposals to adhere more closely to the authorizing statute. And finally, this decision may force Congress to change how it drafts legislation. If Congress continues to draft general statutes assuming that the agencies will fill in the details, it runs a higher risk that a future judge will disagree with the agency’s implementation of Congress’s will. Congress may react to the repeal of Chevron in different ways. It may be motivated to use more detailed and explicit legislative language to ensure an agency can act with greater predictability and certainty in fulfilling congressional intent. Congress may also attempt legislate agency discretion that is similar to Chevron deference.
The Supreme Court also expanded the time when an individual may challenge an agency rule in court.
The Supreme Court also decided another case that expands private parties’ rights to bring litigation against agency rules, even those rules that have been on the books for years. On July 1, 2024, just a few days after the court repealed Chevron, the Court held that the six-year statute of limitations to challenge an agency action under the Administrative Procedure Act does not begin to run until a plaintiff is injured by final agency action. Corner Post, Inc. v. Board of Governors of the Federal Reserve System, Case. No. 22-1008, 144 S. Ct. 2440 (July 1, 2024).
Before Corner Post, most courts held that the statute of limitations for bringing litigation against a federal regulation started ticking when a regulation was finalized. But what if a person was not yet born or the business did not yet exist when a regulation was written? Corner Post resolves this issue. Those parties would have had no interest in the regulation at the time of its promulgation and may be first injured by the rule long after the statute of limitations has passed, leaving them with no remedy to address their injury. Corner Post starts the statute of limitations for challenging a regulation in court when an individual was injured by the rule, not when the agency finalized the rule.
This decision will allow far more court challenges to agency rules. For example, reading from the text of a final agency rule, it can be unclear how a rule will be implemented and how the regulated community will be treated under it. In other words, the public might only understand how the rule can injure individuals after the statute of limitations runs out. Under previous decisions, those injured persons would be shut out from challenging the rule. Under Corner Post, any person injured by a rule may challenge the rule within six years after the injury, whenever that injury occurs after the rule was created.
Together, the Court’s decisions in Loper Bright and Corner Post signal a momentous change in administrative law. Agency rules may be challenged long after they were promulgated, and litigants have new arguments to challenge agencies’ authority to promulgate those rules.
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CullenLaw stands ready to help your business or association reach ideal regulatory outcomes in a post-Chevron world. For more information or to discuss your potential issues, you may reach us at info@cullenlaw.com.