The Chevron Doctrine is dead. Long live the administrative state.

Seyfarth Summary: Today, the foundations of the administrative state were shaken when the Supreme Court overturned the Chevron ruling, ruling that federal administrative agencies are not entitled to restraint in interpreting statutes and that courts, not agencies, must be the ultimate arbiters of statutory interpretation. While the end of Chevron restraint marks a fundamental shift in administrative law, the Supreme Court’s conservative majority cited the value of stare decisis and also ruled that prior decisions on the legality of agency actions cannot be immediately overturned. Moreover, many agency policies, such as the EEOC’s Title VII guidance and the NLRB’s regulatory efforts, were not subject to Chevron restraint to begin with. Other agency policies, such as certain DOL regulations relating to ERISA’s reporting and disclosure requirements, rely on express statutory authority, and challenges to those regulations are unlikely to succeed even without the Chevron shield. While the end of the Chevron restraint represents a significant change in the way federal courts handle challenges to agency policies, the administrative state is still alive and kicking.

The Supreme Court has put an end to 40 years of subordination to the administrative authorities and Chevron USA, Inc. v. Natural Resources Defense Council, Inc.468 US 837 (1984). Loper Bright Enterprises v. RaimondoNo. 22-451, 603 U.S. __ (2024), the Supreme Court held that courts, not agencies, are best placed to interpret ambiguous statutory provisions, even in areas where the agency has expertise.

Writing for a 6-3 conservative majority that continued the current court’s hostility toward the power of federal agencies, Chief Justice Roberts ruled that “courts must use their independent judgment in determining whether an agency has acted within its statutory authority,” rather than allowing the agency to fill loopholes in the law.

It is notable, however, that while the Court’s decision represents a fundamental shift in the way courts review administrative agencies’ exercise of their power, it also temporarily suspends all agency rules that were in place before Loper Bright remain enforceable. Indeed, the Court has pointed out that all decisions relating to Chevron to maintain the actions of an authority, (1) remain applicable law and (2) cannot be repealed solely because they relate to ChevronThe bottom line is that practically nothing will change for the persons and entities subject to administrative sovereignty.

However, that is not to say that there is not significant potential for disruption in the future. We expect regulated companies to bring new (and potentially far-reaching) challenges to long-standing rules that are based only on legal ambiguity. Loper BrightCourts have significantly more leeway in interpreting laws that run counter to an agency’s interpretation and can use this to limit the agency’s authority.

The administrative state lives

However, Loper Bright does not mean the end of the administrative state. Above all, the decision seems to confirm the continued validity of Skidmore vs Swiftin which courts give a minimum of respect to an authority’s interpretation of the law “provided it has the ‘power to persuade'”, given the authority’s thoroughness, its consistency over time and the soundness of its reasoning. The continued availability of Skidmore is likely to provide some protection for long-standing agency rules and interpretations, particularly in uncontroversial areas where the agency has significant expertise.

Additionally, Loper Bright hardly challenges Congress’s ability to explicitly delegate to agencies the authority to issue regulations and relevant definitions (such as the delegations of authority in the Age Discrimination in Employment Act (ADEA), the Americans With Disabilities Act (ADA), and the Genetic Information Nondiscrimination Act (GINA), as well as the recently passed Pregnant Workers Fairness Act and the PUMP Act). When Congress has directly delegated to an agency the authority to exercise discretion over the meaning of a law, Loper Bright suggests that the courts have less scope to contradict that interpretation and that the rules adopted under such delegation are less vulnerable to challenge.

For example, the Employee Retirement Income Security Act of 1974 (ERISA) contains extensive reporting and disclosure requirements. However, Congress has also specifically authorized the Secretary of Labor to approve an alternative method of compliance for a plan or group of plans in certain cases if “he determines that the use of that alternative method is consistent with the objectives” of the Act (29 U.S.C. § 1030(a). Because the statutory language explicitly leaves the question to the Secretary of Labor’s decision, challenging related regulations can be an uphill battle even after the bill is published.Chevron.

Despite the breathless declarations in the media about the end of the administrative state, the day-to-day enforcement actions of the federal government, such as those carried out by the NLRB or the EEOC, will, under today’s Loper Bright Decision. In addition, labor and employment counselors who focus on EEOC or NLRB regulations should be aware that the end of the Chevron The restraint does not affect the way federal courts are likely to view much of the EEOC or NLRB’s regulatory guidance, since courts rarely Chevron Respect for these agencies right from the start.

To date, the EEOC guidance on Title VII has received only Skidmore Reverence, and not Chevron Homage. 1976, in General Electric Co. v. Gilbert, 429 US 125 (1976), the Supreme Court ruled that the EEOC’s Title VII guidelines only Skidmore The Supreme Court followed this decision in 1991 in EEOC v. Arabian Am. Oil Co., 499 US 244 (1991), when it found that an EEOC policy statement and the EEOC Compliance Manual are also not entitled to Chevron reverence.

(Unlike Title VII, which gives the EEOC only “procedural” rulemaking authority, the Age Discrimination in Employment Act (ADEA), the Americans With Disabilities Act (ADA), the Genetic Information Nondiscrimination Act (GINA), and the recently passed Pregnant Workers Fairness Act and PUMP Act all give the EEOC rulemaking authority directly. The EEOC’s regulatory efforts on these fronts are likely to continue unabated.)

Even in the NLRB case, the courts rarely relied on Chevron in recognising its decisions. But the Court’s reasoning in annulling Chevron leaves little room for continued compliance with the NLRB’s decisions, except in limited cases, as discussed in the majority opinion on NLRB v. Hearst Publications, Inc., 322 US 111 (1944), which granted restraint because it was primarily a question of fact rather than a question of law. In reviewing future NLRB decisions, the courts will likely Loper Brights Instruction to respect the legal decisions of the panel, but not to show complete submission to them.

I’m looking forward to

Today’s decision in Loper Bright is not the end of the administrative state, but under the current majority in the Supreme Court, the power of the authorities will likely continue to erode. On June 27, 2024 in SEC v. JarkesyThe Supreme Court ruled that administrative law judges of the Securities and Exchange Commission could not impose certain civil penalties, undermining the agencies’ ability to impose civil penalties outside of federal court. Jarkesywe are likely to continue to see challenges to the legality of the SEC’s appointments of administrative law judges and whether the SEC’s agency structure (as investigator, prosecutor, and judge) violates the Due Process Clause of the Fifth Amendment. These and other issues threaten to further curtail the power of administrative law judges.

Impact on the customer

We will continue to monitor ongoing developments and provide further customer updates on this issue.

If you have any questions, please contact one of the authors of this update or a Seyfarth attorney.