“Chevron” for non-lawyers

On Friday, the U.S. Supreme Court overruled its 40-year-old decision in Chevron v. Natural Resources Defense Council, which had lawyers buzzing and many others wondering what the big deal with Chevron is anyway.

I’ll explain.

What is Chevron?

In Chevron, the Supreme Court had to decide whether the Clean Air Act permits the Environmental Protection Agency to define the term “stationary source” in a particular way because the Act itself did not define it. The court answered that question with a two-part test. The first step was to examine the underlying statute. If Congress had spoken directly on the issue, then the statute controls. Otherwise, an administrative agency, like the EPA, could fill the gap if the statute was silent or ambiguous. If the agency offered “a permissible construction of the statute,” the court had to adhere to that reasonable interpretation — even if the court reads it differently.

It’s called Chevron deference.

Chevron deference is no more.

On Friday, the Supreme Court ruled in Loper Bright Enterprises v. Raimondo that the Administrative Procedure Act, a federal law that governs administrative law procedure (think: EEOC, NLRB, DOL), requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority. It codifies that “courts decide legal questions by applying their own judgment,” serving “as a check upon administrators whose zeal might otherwise have carried them to excesses not contemplated in legislation creating their offices.”

“Perhaps most fundamentally,” noted the Supreme Court majority, “Chevron’s presumption is misguided because agencies have no special competence in resolving statutory ambiguities. Courts do.”

That’s not to say a court will fill in silences and resolve ambiguities in statutes with blinders. Courts can defer to the agency’s “body of experience and informed judgment,” especially those underlying facts where these agencies may have particular expertise. However, an agency’s interpretation of a statute “cannot bind a court.”

The result is that courts may, but do not have to, defer to an agency’s interpretation of the law when a statute is ambiguous.

Why does overruling Chevron matter?

Although cases decided using Chevron deference will remain intact (for now), consider some of the “final” administrative rules set to take effect in 2024, where courts may weigh in. Employers have challenged the FTC’s plan to ban noncompetes. Seventeen states unsuccessfully challenged the EEOC’s interpretation of the Pregnant Workers Fairness Act to cover elective abortions. Friday’s decision could provide better footing for an appeal.

Tomorrow, I’ll explain what a Texas federal judge did to the Department of Labor’s new overtime regulations before the ink dried on the Loper Bright decision.

(P.S. – Happy Bobby Bonilla Day!)