What happened?

On June 28, 2024, the Supreme Court on Friday cut back sharply on the power of federal agencies to interpret the laws they administer and ruled that courts should rely on their interpretation of ambiguous laws. The decision will likely have far-reaching effects across the country since it gives power to the judges.

What are the details?

Key Bites:

• The Supreme Court, by a 6-3 vote, overturned the 1984 Chevron doctrine, shifting power from federal agencies to the judiciary.
• Under that doctrine (Chevron doctrine), if Congress has not directly addressed the question at the center of a dispute, a court was required to uphold the agency’s interpretation of the statute if it was reasonable.
• Moving forward, this change allows courts to more easily strike down agency rules and provides employers with a tool against regulatory overreach.
• The decision ends Chevron’s deference, requiring courts to exercise independent judgment when reviewing agency action. If a law is ambiguous, courts will now decide whether an agency has acted within its statutory authority.
• The ruling alters decades of precedent, changing how courts assess regulatory authority and executive actions. It sets a new standard for lower courts, instructing them not to defer to a federal agency’s interpretation of laws when challenged.
• The ruling is expected to lead to more consistent agency policy and guidance over time by requiring courts to interpret statutes, rather than deferring to administrative agencies.
• This change should help eliminate the shift in priorities that occurs with new presidential administrations. As Chief Justice Roberts reflected, “[t]he only way to ensure that the law will not merely change erratically, but will develop in a principled and intelligible fashion, is for the Court to leave Chevron behind.

Business Considerations

• Employers should anticipate increased court involvement: With the abolition of the Chevron doctrine, employers may find themselves dealing with more inconsistencies due to increased judicial discretion. Different courts may interpret the same regulation differently, leading to a patchwork of rulings and creating compliance challenges, especially for multistate employers.
• Employers should prepare for instability: Stay updated with the surge of cases challenging administrative interpretations of workplace laws and brace for varying rulings in different jurisdictions, leading to a complex compliance landscape.
• Employers should maintain compliance with current regulations: Despite the abolition of the Chevron doctrine, existing regulations from agencies like the EEOC, DOL, OSHA, and NLRB are still in effect until a court rules otherwise.
• Employers should review workplace practices and policies: Audit and determine if they are based on administrative rules or guidance.
• Employers should consider state laws: Do not solely rely on federal statute interpretations. Even if a court’s interpretation of a federal statute is favorable, state laws may not align. Be aware of potential increased regulation at the state level, especially given the expected softening at the federal level.

Source References

• Chevron v. Natural Resources Defense Council
• Loper Bright Enterprises v. Raimondo (06/28/2024)
• Supreme Court Loper Bright Enterprises v. Raimondo Docket

Resources

• Supreme Court strikes down Chevron, curtailing power of federal agencies (SCOTUS blog)

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