The GigReporter

The United States Supreme Court recently issued its opinion in Loper Bright Enterprises v. Raimondo, No. 22-451 (June 28, 2024)[1], overturning decades of precedent requiring deference to reasonable federal agency interpretations of statues. The consequences of this decision are potentially far-reaching, although how it will shake out in practice is still very uncertain. Also, this case has no direct impact on state agencies, so parties to active or prospective state litigation must be mindful of the difference.

Forty years ago, the Supreme Court decided Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (2024), holding that when a federal agency is responsible for administering a statute, and that statute is ambiguous, federal courts should defer to the agency’s interpretation of the statute so long as that interpretation was “a permissible construction”, reasoning that agency expertise should control in such situations. In the years since, this doctrine of “Chevron deference” has been a key issue in federal litigation around agency-administered statutes.

Loper Bright overturned Chevron, finding that such a rule of deference is inconsistent with the federal courts’ constitutional role as arbiters of legal questions and the text of the Administrative Procedure Act, requiring courts exercising judicial oversight of agency actions to “decide all relevant questions of law [and] interpret constitutional and statutory provisions . . .” The Court’s opinion did note, however, that previous cases using the Chevron doctrine would not be overruled, at least not only on the basis that they had relied on Chevron.

The most direct impact of Loper Bright will be on regulatory litigation itself; Chevron deference was deliberately favorable to agency positions, so the government will probably lose more often going forward. Federal agencies under the Biden administration have been very active in areas relevant to SCI clients’ interests, with new rules on employee/independent contractor classification, joint employment, and non-competition agreements that are currently being litigated, and Loper Bright makes it more likely the government will lose those cases. More broadly, many commentators expect this decision to effect legislators and agency decision-making beyond the litigation context, writing statutes more carefully and narrowly, and writing rules more closely aligned with statutory text.

On the other hand, these effects may be more muted than some are predicting. Courts have always been able to get around Chevron deference when they wanted to, through finding that statutes are not ambiguous or that agency interpretations are not permissible constructions, so the change in litigation outcomes may not be drastic. Legislative drafting, for its part, is prone to sloppiness and ambiguity in all contexts; Congress’s ability to increase how clear and narrow its statutes are, even with Loper Bright weighing on it, is probably limited. Agencies themselves are still subject to the same political and social pressures as before, and may expand their issuance of non-binding interpretations, which are of little value in litigation but influence behavior regardless.

Finally, SCI clients should pay attention to whether they are dealing with state rather than federal agencies, as certain state and local agencies have also been very active rule makers recently on issues like classification, discrimination, and minimum wages. While state courts often look to the federal ones for guidance in certain matters, it is by no means certain that they will do so here, and anyone involved in or contemplating litigation involving state agencies should research the relevant state law jurisprudence on deference instead of assuming a Loper Bright framework applies.

[1] https://www.supremecourt.gov/opinions/23pdf/22-451_7m58.pdf