By David Lehn
For 40 years, Chevron deference has assured federal agencies a relatively free hand to adopt and change their interpretation of the statutes governing their actions. Over those decades, judicial attitudes toward Chevron deference have changed dramatically. Now, in Loper Bright Enterprises v. Raimondo and Relentless Inc. v. Department of Commerce, the Supreme Court has been asked to overturn Chevron, and the signals from the Justices strongly suggest the Court will do so, at least to some extent.
Predicting the outcome of Supreme Court cases may be a fool's errand, but predict we shall. If nothing else, this article may help practitioners and clients get a jump on preparing for a post-Chevron world. To that end, this article will cover a lot of ground, attempting not only to predict the outcome and rationale of Loper/Relentless but also to extend that rationale to various ancillary issues.
This article begins with a primer on Chevron deference and the main perceived problems with it. Those problems set up the second part of this article, which predicts how the Supreme Court will decide Loper/Relentless and what its predicted rationale will mean for a range of issues raised by judicial review of agency actions. The article finishes with some practical advice.
What's Wrong With Chevron Deference?
The framework established in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984), governs the judicial review of federal agencies’ interpretation of federal statutes. The doctrine's core is the familiar two-step procedure: at step one, the court determines whether “the intent of Congress is clear” on the specific issue; if so, that intent controls.
But if the statute is “silent or ambiguous” on the specific issue, then the court proceeds to step two, where it must defer to—i.e., accept—any interpretation by the agency that is “reasonable” and within any statutory and constitutional boundaries, even if the court would not judge that interpretation the “best” one. Nat'l Cable & Telecomm. Ass'n v. Brand X Internet Servs., 545 U.S. 967 (2005).
Over the years, the doctrine has acquired other features and contours. For example, an agency interpretation is eligible for deference only if it was adopted through the agency's exercise of congressionally granted authority “to make rules carrying the force of law,” such as by a regulation promulgated via notice-and-comment rulemaking. United States v. Mead Corp., 533 U.S. 218 (2001). That principle is sometimes called “step zero,” but “step two-a” would be more apt.
On the other hand, agencies get Chevron deference even when they determine the scope of their own statutory jurisdiction, City of Arlington v. Federal Communications Commission, 569 U.S. 290 (2013), and even if they have changed their position, as long as they rationally explained the change, Smiley v. Citibank (South Dakota), N.A., 517 U.S. 735 (1996).
Chevron deference initially enjoyed broad judicial acceptance. Chevron itself was a unanimous (6-0) decision affirming EPA's decision to adopt less stringent environmental controls. But support has gradually eroded as concerns have accumulated.
A salient concern has been that agencies and courts have been too willing to deem a statute “ambiguous,” treating ambiguity as merely an exercise in the definitionally conceivable. Properly understood, Chevron teaches that ambiguity exists only if Congress's intent cannot be discerned after applying “the traditional tools” of statutory interpretation, which are generally understood to be the statute's “text, structure, history, and purpose,” Kisor v. Wilkie, 139 S. Ct. 2400 (2019).
Over the past decade or so, the Supreme Court has tried to crack down on overly quick findings of ambiguity by stressing that courts “must exhaust all the ‘traditional tools’” of interpretation before deeming a statute ambiguous and by rarely finding a statute ambiguous—leading by example. Id. Lower courts have generally gotten the message.
Still, as the Justices’ questioning at oral argument in Loper/Relentless shows, misgivings about Chevron deference remain. Picking up on points raised by certain Justices in prior separate opinions and articles, the Loper/Relentless challengers assert several forceful but not necessarily knockdown objections.
Citing Marbury v. Madison, 5 U.S. 137 (1803), they say Article III of the Constitution makes the courts the exclusive authoritative interpreter of federal law. As a leading scholar put it, Chevron “establish[ed] a kind of counter-Marbury for the administrative state …, declar[ing] that in the face of ambiguity, it is emphatically the province and duty of the administrative department to say what the law is.” Cass R. Sunstein, Chevron Step Zero, 92 Va. L. Rev. 187 (2005). But since the founding, federal courts have deferred to the executive branch's and states’ interpretations of federal law in various situations, including in mandamus and habeas, sometimes at Congress’ direction, e.g., under the Antiterrorism and Effective Death Penalty Act of 1996, 28 U.S.C. § 2254(d).
Similarly, the challengers say the Administrative Procedure Act (APA) gives courts ultimate interpretive authority—the APA states, “the reviewing court shall decide all relevant questions of law [and] interpret constitutional and statutory provisions,” 5 U.S.C. § 706—but that language might be understood to include the kinds of judgments that courts render under the Chevron framework.
The challengers also say that Chevron deference violates due process by treating the agency as the judge in its own case, but agencies unquestionably also receive deference for their factual and technical determinations under the arbitrary-and-capricious standard of review.
These objections will be embraced by at least some of the Justices in Loper/Relentless, and one or more might even garner a majority. But the central problems with Chevron can be stated more simply.
First, Chevron’s rule does not match its rationale. Chevron rests on a dichotomy between policy and law. In the name of “respect[ing] legitimate policy choices” by the executive branch, however, Chevron holds that courts must accept agencies’ legal interpretations.
Second, Chevron goes awry in presuming that statutory ambiguity and silence indicate congressional intent to delegate authority. Ambiguity is often inadvertent, a product of mistake or the inherent limitations of language. And silence could indicate Congress's decision to withhold authority to act, for agencies “possess only the authority that Congress has provided.” Nat'l Fed'n of Indep. Bus. v. Dep't of Labor, 595 U.S. 109 (2022).
What Will the Supreme Court Do With Chevron Deference?
Enough table-setting—how will the Supreme Court decide the case? Fundamentally, the Court will require tighter policing of the line between law and policy than Chevron did. At a minimum, the Court will jettison the notion that statutory ambiguity or silence justifies a presumption that Congress intended to vest ultimate interpretive authority in agencies. Thus, the Court will at least eliminate Chevron’s default deference to “reasonable” agency interpretations of ambiguous and silent statutes.
The Court will likely go further, holding either that Congress is constitutionally precluded from vesting ultimate interpretive authority in agencies, or that Congress may do so only if it expresses that intent clearly but neither the APA nor the statute at issue in Loper/Relentless does so. Either way, after Loper/Relentless, courts will generally, and perhaps categorically, have ultimate authority to interpret federal statutes and will be charged with adopting what they deem the “best” interpretation in each case.
What about Skidmore deference, which has been suggested as an alternative to Chevron deference? For starters, it's not deference in the way Chevron uses that term. It merely instructs courts to give “weight” to considered agency interpretations on matters within the agency's expertise, especially if the agency held that interpretation “consisten[tly].” Skidmore v. Swift & Co., 323 U.S. 134 (1944). At oral argument in Loper/Relentless, Justice Kagan expressed the common view that “Skidmore has always meant nothing.” But Skidmore is meaningful insofar as it reminds courts to give serious consideration to agency interpretations in certain situations, out of respect for a co-equal branch. Indeed, Skidmore deference is best understood as just another common-sense traditional tool of statutory interpretation. For that reason, the notion that Chevron and Skidmore are mutually exclusive is mistaken; Skidmore deference always should have been relevant at Chevron step one. In any event, Skidmore will return as part of the standard procedure for identifying the best statutory interpretation.
On the other side of the law/policy line, the Supreme Court will reaffirm more limited and deferential review for agencies’ policy determinations. Courts will review them only to ensure that they do not exceed statutory or constitutional boundaries—as interpreted by the courts—and that they do not run afoul of the APA's arbitrary-and-capricious standard as elaborated in Motor Vehicle Manufacturers Ass'n of the United States, Inc. v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29 (1983). This deferential approach will apply even when the agency reverses its policy position, in recognition of the policy discretion that the politically accountable branches must enjoy in a democracy.
Some Justices might go further and opine that Congress is constitutionally prohibited from delegating to agencies not only interpretive authority but also policymaking. A majority, however, will not adopt that position. The Court, including many conservative Justices, has long recognized the practical reality that “Congress simply cannot do its job absent an ability to delegate power under broad directives,” at least as to “subsidiary” policy issues. Yakus v. United States, 321 U.S. 414 (1944); Mistretta v. United States, 488 U.S. 361 (1989); see also City of Arlington. This reality is reflected in the non-delegation doctrine, which allows Congress to delegate policymaking as long as it supplies an “intelligible principle.”
Obviously, then, the battleground after Loper/Relentless will be whether a particular question falls on the law or policy side of the line. There will surely be an endless amount of litigation on this threshold question, and the courts will have to resolve it in each case de novo, as a matter of statutory interpretation.
Statutory ambiguity will not be the test for finding a policymaking delegation, for that would in effect restore Chevron deference. Rather, the Court will demand more affirmative evidence of such congressional intent, perhaps along the lines of: does the full statutory context indicate that Congress tried to specify the details of a policy, however imperfectly, or merely painted in broad strokes with a conscious awareness that details would need to be filled in? A strong indicator of a policymaking delegation—but not necessarily the only one—will be indeterminate language of judgment, such as “reasonable,” “feasible,” “appropriate,” “imminent,” and “burdensome.” Indeed, such language has been understood to embody intelligible principles for purposes of the non-delegation doctrine, though, as always, “the degree of agency discretion that is acceptable [will] var[y] according to the scope of the power congressionally conferred.” Whitman v. Am. Trucking Ass'ns, 531 U.S. 457 (2001).
To be sure, judges can fill in the meaning even of indeterminate words. Judges, for example, routinely decide whether an agreement in restraint of trade is “reasonable,” but when they do, they are making policy pursuant to their delegated authority under the Sherman Act. Nat'l Soc'y of Prof'l Eng'rs v. United States, 435 U.S. 679 (1978).
Where such plainly indeterminate language is absent, it may be harder to decide whether a question is one of law or policy. For example, there are hundreds of instances in the U.S. Code where Congress has directed an agency to “define” a statutory term. See, e.g., 21 U.S.C. § 353a(b)(1); 42 U.S.C. § 1320a–3(a)(1). Is defining a term interpreting law or making policy? And if the former, does that mean Congress can no longer charge agencies with defining terms? The Court is unlikely to lay down a single rule for definitions, instead leaving each case to turn on the specific statutory language. In general, however, it would be unsurprising if the Court finds that statutory commands to define a term indicate congressional intent to delegate policymaking, not legal interpretation—in effect, the call for a definition recognizes that the term's meaning is indeterminate and can be resolved only by reference to subsidiary policies in service of Congress's broader policy.
What about statutory silence—will it indicate congressional intent to delegate policymaking or congressional intent to withhold the agency's authority to act at all? There may be strong winds toward the latter view, but they will probably not prevail on this point. The “major questions” doctrine, as recently reformulated by the Supreme Court in West Virginia v. EPA, 597 U.S. 697, 142 S. Ct. 2587 (2022), teaches that agencies lack the power to make “major policy decisions”—perhaps in the eye of the beholder—absent “clear congressional authorization.” To now hold that statutory silence categorically disables agencies from making policy would convert the “major-questions doctrine” into the “questions doctrine” and would substantially impair Congress's ability to legislate given—as noted above—the impossibility of fully explicating policies in statutes.
An operable principle for silence may be this: if but only if the effective implementation of the statutory program, or the achievement of Congress's purpose in establishing the program, requires resolution of a policy issue on which the statute is silent, then the silence presumptively indicates a delegation of policymaking to the agency. The alternatives—that either politically unaccountable courts would make the policy determination themselves, or that no one would and the agency would be disabled—are likely too implausible to reflect Congress's actual or presumed intent.
What about so-called step zero? For legal interpretations, it will disappear, although the process by which the agency arrived at its interpretation will affect the weight accorded the agency's view under Skidmore. Step zero should also be irrelevant when a court is reviewing an agency's policy determination. If an agency makes a delegated policy determination through a reviewable action—a regulation, an adjudication, or otherwise—then the deferential State Farm standard will apply.
Finally, a word about Auer deference, which requires courts to defer to agencies’ interpretation of their own ambiguous regulations. Auer v. Robbins, 519 U.S. 452 (1997). In effect, Auer deference is Chevron deference for the interpretation of regulations instead of statutes. Although the Supreme Court reaffirmed Auer deference only a few years ago in Kisor, the rationale on which the Court relies in deciding Loper/Relentless could spur some reconsideration or revision of the Auer doctrine.
How Should Agencies, Lawyers & Regulated Actors Respond?
Overturning Chevron deference will raise an immediate practical question: prior cases decided at Chevron step one obviously will be unaffected, but what about cases in which courts previously upheld an agency interpretation at step two? The Supreme Court might address this in Loper/Relentless or in another pending case, Corner Post v. Board of Governors of the Federal Reserve System.
Here is a guess as to how it will play out. Res judicata will preclude the reopening of those cases, while time bars and statutes of limitations, when applicable, will generally prevent new challenges to old actions. But insofar as those bars haven't been triggered yet or the agency takes a new action applying its old interpretation, aggrieved parties may be able to challenge the old interpretation. In such suits, prior judicial decisions upholding the agency's interpretation at step two will not be controlling because they resolved different questions—that the statute was ambiguous and the agency's interpretation was reasonable—but they could be persuasive on subsidiary issues. Also, agencies could administratively revisit interpretations previously upheld at step two, either sua sponte or in response to administrative petitions for reconsideration, but they could have done that anyway under the Chevron regime.
Going forward, agencies will have greater pressure to do the work of statutory interpretation. Because agencies institutionally prefer to preserve wide discretion for themselves, it has been routine in the Chevron era for agencies to declare a statute “ambiguous” because their preferred interpretation is conceivable, declare their preferred interpretation a “reasonable” resolution of that ambiguity, and move on. That won't fly anymore.
Instead, agencies confronting a question of statutory meaning will have to choose among three primary strategies: adopt the interpretation they believe is correct in light of all the traditional tools of statutory interpretation, adopt the one they predict the courts will declare is correct, or adopt the one that best serves their policy goals among those they believe the courts might adopt. No single strategy will become universal, but the third—which will approximate agency positions under the Chevron regime—will be common, consciously or not.
Also, agencies will use notice-and-comment rulemaking less often to adopt legal interpretations. Without the benefit of Chevron deference, they will have diminished incentive to use that laborious process. Instead, they will increasingly favor interpretive rules, guidance, speeches, and other informal statements, which are easier for agencies to issue and harder for regulated entities to challenge facially because of the APA's final-action requirement. As a result, overturning Chevron deference could precipitate downstream confusion about—and then revision of—doctrines regarding the final-action requirement and the dividing lines between substantive rules and other types of agency actions. Those issues are too complex to explore further here.
In both administrative and judicial proceedings, lawyers will certainly need to tailor their arguments to these new doctrinal contours. The elimination of Chevron deference could favor one interest or industry over another in a specific case, but it will not systematically favor one side, except that regulated entities will generally benefit to the extent that, without Chevron deference, courts will likely hold more often that Congress did not authorize the agency to act at all on a particular matter.
Finally, eliminating Chevron deference could well increase interpretive variation across circuits: although circuit courts have sometimes disagreed about whether a statute is ambiguous and the agency's interpretation is reasonable, circuit courts may be more likely to disagree about the best reading of a statute. On the other hand, private actors—who have often been whipsawed by agency re-interpretations with each new administration—might appreciate the greater stability of the legal constraints on agency action, though, again, agencies will still be free to change policies.
The views in this Professional Perspective are solely those of the author, not of his clients or law firm.
Copyright 2024 Bloomberg Industry Group, Inc. (800-372-1033) Where Is the Supreme Court Heading on Chevron Deference? Reproduced with permission.