What Is the Practical Effect of the Supreme Court Overruling Chevron Doctrine Deferring to Agency Interpretations?

In the 6-3 decision of the Supreme Court in Loper Bright Enterprises v. Raimondo (6/28/24), the Court stated that the Chevron decision improperly transferred the power to interpret the law from the judiciary to federal agencies.  "Chevron was a judicial invention that required judges to disregard their statutory duties," Chief Justice John Roberts wrote.  He said judges "must exercise their independent judgment in deciding whether an agency has acted within its statutory authority."  

This result should not come as a shock, as the courts have been signaling for years that the Chevron Doctrine would likely be changed.  As a result, the Chevron approach faced increased decline as judicial precedent, particularly given the increased reliance on the Major Questions Doctrine suggesting that agencies can only regulate issues of "vast economic and political significance" if Congress clearly and explicitly delegated that power, and the Non-Delegation Doctrine which addresses whether Congress can delegate power to other branches of government.  Further, not every administrative action case resulted in a Chevron analysis, as Chevron only applied when an agency interpreted an ambiguous or silent statute, and even then, in limited circumstances.  The doctrine did not apply when Congress expressly delegated an issue to an agency, where an agency's interpretation was an informal, non-binding guidance, or where the agency was interpreting its own regulations.

The Supreme Court announced that this ruling would "not call into question prior cases that relied on the Chevron framework."  While the meaning of this limitation is not entirely clear, it suggests that the overruling of the Chevron Doctrine will not be used to retroactively challenge prior judicial resolutions of the issues.  Agencies will also still be allowed to issue guidance interpretations even though they will not be binding.  The opinion stated at several places that judges could still defer to an agency's interpretation of a statute if they find it persuasive under another doctrine known as the Skidmore Doctrine, which suggests judges consider a federal agency's interpretation when deciding what a statute or term means.

Effects on Labor & Employment Law

There are significant effects of this case on labor and employment law.  Over the last year, the Biden Administration published major rules on overtime, worker classification, joint employment, pregnancy accommodation, prevailing wages, and non-compete agreements.  In a couple of these new rules, like white-collar exemptions from overtime, and the Davis-Bacon prevailing wage rules, slightly different issues will arise since the Department of Labor (DOL) was delegated a certain amount of discretion in those areas, but the decision will still encourage courts to make sure the DOL does not exceed its delegated authority.  The Chevron ruling in unlikely to affect decisions at the National Labor Relations Board (NLRB), however, as the Supreme Court deferred to the Board's interpretation of federal labor law under a different line of cases long before the 1981 Chevron decision.  

This article is part of our August 2024 Newsletter. 

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