U.S. Supreme Court Says Courts, Not Administrative Agencies, Should Interpret Ambiguous Statutes

Since the U.S. Supreme Court decision in Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984), courts have often been required to defer to “permissible” agency interpretations of the statutes those agencies administer—even when a reviewing court reads the statute differently. In a landmark decision issued June 28, 2024, the U.S. Supreme Court overruled this so-called Chevron doctrine. [Loper Bright Enterprises v. Raimondo, No. 22-451 (U.S. Sup. Ct. June 28, 2024)].

Chevron Framework

When interpreting federal statutes administered by federal agencies, the Chevron framework—cited in more than 18,000 federal court cases since its inception—required reviewing courts to take the following steps:

1. The court must first ask, “Has Congress directly spoken to the precise question at issue?”
   • If Congress intent is clear, that is the end of the inquiry.
2. If the statute is silent or ambiguous, the court must defer to the agency’s interpretation if it is based on a permissible construction of the statute.

The Controversies

The current case arose after two fishing companies challenged a rule issued by the National Marine Fisheries Service (NMFS) pursuant to the Magnuson-Stevens Fishery Conservation and Management Act (MSA). The Rule required fishermen to pay the cost of certain Government-certified on-board observers required to ensure compliance with the MSA. When required, the cost was approximately $710/day, reducing the annual returns to the vessel owner by up to 20 percent.

The fishing companies argued that the MSA does not authorize the NMFS to require them to pay for the cost of the observers required by a fishery management plan. The district courts in each case granted summary judgment for the Government, concluding that even if there was ambiguity in the statute, deference to the agency’s interpretation was warranted under Chevron. In Loper Bright, the district court decision was affirmed by the U.S. Court of Appeals for the D.C. Circuit. In Relentless, Inc., et al. v. Department of Commerce, the district court opinion was affirmed by the U.S. Court of Appeals for the First Circuit. The U.S. Supreme Court granted certiorari in both cases, limited to the question of whether Chevron should be overruled or clarified.

Supreme Court Decision

In overruling Chevron, the Court, in a 6-3 opinion, determined that the Administrative Procedures Act requires the courts to exercise independent judgment in determining the meaning of statutory provisions. It is the courts, and not the administrative agencies, that are granted authority to “decide all relevant questions of law” and “interpret statutory provisions.” The Court noted that the interpretations and opinions of the relevant agency, based on specialized experience, constitutes a body of experience that a court may look to for guidance. In the end, however, it is the court, not an agency, that is tasked with confronting statutory ambiguities and resolving them by exercising independent legal judgment. While Congress may specially confer some deference to an agency through a statute, in the absence of such delegation, statutory interpretation remains wholly the domain of the courts.

Once it determined that Chevron was flawed, the Court had to decide whether stare decisis required the Court to keep the precedent alive. The Court ruled that it did not. “Chevron has proved to be fundamentally misguided. Experience has also shown that Chevron is unworkable,” stated the Court. Under Chevron, the Court explained, statutory ambiguity has become a license for an agency to change positions as much as it likes. This, the Court noted, has undermined the very “rule of law” values that stare decisis exists to secure. The Court summarized its holding as follows:

Chevron is overruled. Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the APA requires. Careful attention to the judgment of the Executive Branch may help inform that inquiry. And when a particular statute delegates authority to an agency consistent with constitutional limits, courts must respect the delegation, while ensuring that the agency acts within it. But courts need not and under the APA may not defer to an agency interpretation of the law simply because a statute is ambiguous.

Although preventing the application of Chevron to future cases, the Court held that the case did not call into question prior cases relying on the Chevron framework. In other words, the holdings of those cases remain lawful and subject to stare decisis, despite the Court’s change in interpretive methodology.  

Considerations for Agricultural Producers

This decision opens the door for courts to apply a new level of scrutiny to rules issued by the IRS, the USDA, the EPA, and other federal agencies. While stare decisis applies to prior court decisions relying on Chevron, it does not mean someone newly impacted by a rule cannot challenge that rule in court. This is especially true given a different decision the Court issued on July 1, 2024. Corner Post, Inc. v. Board of Governors of the Federal Reserve System, No. 22-1008 (U.S. S. Ct. July 1, 2024). In a 6-3 ruling, the Court in Corner Post ruled that an Administrative Procedure Act claim does not accrue for purposes of the six-year statute of limitations until the plaintiff is injured by final agency action.

Absent a specific delegation of power to an agency from Congress, Loper Bright authorizes the courts, not the agencies, to clarify the meaning of statutes. Although this may lead to courts overturning more agency decisions in the short term, it could lead to greater rule stability across changing administrations. The full impact of these decisions, while seemingly pivotal, remains to be seen.