United States Supreme Court Overrules Forty Years of Agency Deference Precedent in a Decision That Will Impact Almost Every Area of Law (Including Labor and Employment)

Today, in two consolidated cases, Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce, the United States Supreme Court held that courts may no longer defer to an agency interpretation of law simply because the law is ambiguous, overruling Chevron v. Natural Resources Defense Council, 467 U.S. 837 (1984), and signaling what will likely be a dramatic shift in how federal agencies regulate workplace rules.

With many federal labor and employment laws written more than half a century ago, when workplaces were very different from today’s workplaces, modern labor and employment law is governed largely by agency interpretation. And federal agencies like the EEOC, DOL, OSHA, and NLRB all invoke Chevron regularly to argue that it requires a court to defer to reasonable agency interpretations when resolving statutory ambiguities—even if the court would have reached a different conclusion in interpreting the statute. Without that deference, the Court’s decision will most certainly be felt by any employer subject to federal labor and employment laws.

What happened in Loper and Relentless?
Loper and Relentless are virtually identical cases brought by commercial herring fisheries off the New England coast. They are also just two of the lengthy list of cases over the past forty years whose outcomes were dictated by the Supreme Court’s 1984 Chevron case. The defendant agency in Loper and Relentless was the National Marine Fisheries Service (“NMFS”), which is the federal agency that administers the Magnuson-Stevens Act (“MSA”), which is the statute that governs the management of fisheries operating in federal waters. The Loper and Relentless fisheries argued that the NMFS exceeded its statutory authority under the MSA in promulgating a rule that required fisheries to help fund a government-run fish conservation program.

The lower courts—in Relentless, the United States District Court for Rhode Island/United States Court of Appeals for the First Circuit, and in Loper, the United States District Court for the District of Columbia/United States Court of Appeals for the District of Columbia Circuit—sided with the government. Rather than interpret the MSA, however, the issue in the lower courts was focused on Chevron. The lower courts determined that the MSA was silent as to whether the NMFS had power to impose its rule, ambiguity existed that called for Chevron deference, and the NMFS’s interpretation of the MSA was reasonable.
           
The Supreme Court granted certiorari in both cases, limited to the issue of whether the Court should overrule or clarify Chevron.

The Supreme Court’s Ruling
In a 6-3 decision, the Supreme Court overruled Chevron, determining that Chevron deference could not be squared with the Administrative Procedure Act (APA). The Court’s criticisms of the 1984 opinion are harsh, with the Court opining, for example, that Chevron has prevented judges “from judging” for the past forty years. The Court explained that since Congress enacted it in 1946, the APA has required the reviewing court, and not the agency whose action it is reviewing, to interpret statutory provisions. Thus, when Chevron demanded “that courts mechanically afford binding deference to agency interpretations,” it became “the antithesis of the time-honored approach the APA prescribes.” The Court noted that courts routinely interpret ambiguous statutes in cases that have nothing to do with agency interpretations and that in those cases, the existence of an ambiguity in the statute does not mean the court can delegate interpretation to someone else: “Courts in that situation do not throw up their hands because ‘Congress’s instructions have’ supposedly ‘run out,’ leaving a statutory ‘gap.’”

The Court also firmly rejected one of the government’s arguments to uphold Chevron—that agencies have subject-matter expertise regarding the statutes they are charged with administering—declaring that “agencies have no special competence in resolving statutory ambiguities. Courts do.” In its final parting shot at Chevron, the Court questioned whether stare decisis required it to “persist in the Chevron project.” The Court found that it did not, concluding that Chevron “has undermined the very ‘rule of law’ values that stare decisis exists to secure."

Looking Forward

• With less agency deference, we can likely expect more restrained rulemaking, less rulemaking overall, and fewer changes in agency interpretations upon changes in presidential administrations and constantly changing boards (like the NLRB).
• Employers may now have an easier time successfully challenging agency actions (as Chevron deference was known to give agencies a defensive advantage in court cases).
• With an increased chance of success, we can also likely expect to see more challenges to federal agency rules impacting the workplace, from more recent rules like the EEOC’s PWFA rule and the DOL’s fast-approaching DOL overtime rule (poised to go into effect July 1), to long-established rules under the NLRA and Title VII.