CHEVRON IS OVERRULED, by Kevin Diehl

Chevron is Overruled

On June 28, 2024, while most of the nation’s attention was focused on the aftermath of the presidential debate between Joe Biden and Donald Trump that led to Biden’s departure from the race, the United States Supreme Court released an opinion in a case called Loper Bright Enterprises v. Raimondo. If - like most people - you don’t breathlessly wait for Supreme Court decisions, the court’s opinion probably flew under your radar. But in the legal world, the case produced a seismic shift that will likely be felt for years to come.

So what was this monumental case all about? In short, it overturned a forty-year-old Supreme Court case called Chevron v. Natural Resources Defense Council. That long-ago decision in Chevron stated that if federal legislation is ambiguous or leaves an administrative gap, courts must defer to the regulatory agency’s interpretation if that interpretation is reasonable.

What does that mean? It all has to do with the process of passing and implementing laws. In our constitutional system, Congress is the branch of government that makes laws. When a piece of legislation makes its way through the House and Senate, it ends up on the president’s desk and he signs it into law. Once that happens, Congress’s role in that particular law is essentially finished. At that point, it’s up to the Executive branch - that is, the president - to carry out or implement the law. That process is carried out through the federal agencies that are under the purview of the Executive branch.

For example, let’s say Congress passes legislation to increase income taxes. After the

President signs the bill, the task of implementing the tax increase goes to the Internal Revenue Service. The IRS is supposed to follow the letter of the law in carrying out its task. But what if the language of the law is ambiguous, or allows for some possible different interpretations as to how it should be implemented? How should the agency proceed? Those were the circumstances that gave rise to the Chevron case back in the 1980s.

In 1977, Congress passed a bill that amended the Clean Air Act, a law that was originally

passed in 1963 to curb air pollution. The 1977 amendment to the Clean Air Act required any project that would create a major “stationary source” of air pollution to go through a lengthy and very involved process to be approved. That meant that if a new factory was going to be built that would produce air pollution, it had to go through an elaborate, possibly years-long approval process. The Environmental Protection Agency was tasked with carrying out the provisions of the law.

At first, the EPA interpreted the word “source” in the law to cover any significant addition at a factory. Meaning that if a company wanted to install, say, a new boiler, it had to go through that lengthy approval process. But in 1981, the EPA under President Reagan altered its interpretation of the word “source” to mean the entire factory or plant, not an individual building or machine. This allowed companies to build new projects without going through the EPA’s long review process if they simultaneously modified other parts of the facility to reduce emissions, thus avoiding any net change in emissions.

This new interpretation of the law did not sit well with some environmental groups, and it prompted the Natural Resources Defense Council to file a lawsuit challenging the EPA’s new definition. In a case called Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., the Supreme Court ruled in favor of Chevron on the grounds that courts should broadly defer to the EPA - or any other regulatory agencies - in their interpretations of how best to carry out the laws passed by Congress.

This came to be known as the “Chevron Doctrine,” and for 40 years the doctrine directed that federal judges should give deference to agencies over how to interpret the statutes they administer when a dispute arises.

The doctrine provided a two-part test that courts had to follow when they reviewed how agencies implemented laws. First, the judge is required to examine the wording and the context of the statute in question to see if Congress’s intent is clear. If it is, then the matter is settled: The agency is obliged to follow the letter of the law.

But if the statutory language is ambiguous - that is, if it has two or more reasonable

interpretations - the reviewing court must defer to the agency’s choice in how to carry out the law. At this point, the court is required to evaluate whether the agency’s interpretation of the law is “reasonable” or “permissible.” If it’s not, then the court may impose its own interpretation of the law. The rationale for giving such deference to the agencies is that those agencies, which are accountable to an elected president, are better suited than federal judges to make the policy choices that Congress left open.

Over the years, more than 18,000 cases have been decided based on the Chevron Doctrine. For most of its 40-year life, there has been a movement in legal circles to overturn the doctrine because, its opponents believe, Chevron vests too much power in executive agencies and prevents courts from their constitutional duty to interpret laws passed by Congress.

What’s really at issue here is the rise of what is often referred to as the “modern administrative state,” or “the deep state.” The presidency of Franklin Roosevelt and his New Deal ushered in an era of massive government expansion that never really stopped. The federal government has grown into a vast labyrinth of agencies with millions of employees. The so-called “experts” who run these agencies are not elected, but they wield immense power to impose regulations on all Americans.

The Chevron Doctrine only enhanced that power. In those 18,000-plus cases, the bureaucracy always held the upper hand over Americans who tried to question the authority of federal agencies - and the courts were supposed to defer to the judgment of the bureaucrats.

So when two cases recently came before the Supreme Court - Loper Bright Enterprises v.

Raimondo, and Relentless, Inc. v. Department of Commerce - the opponents of Chevron finally had a chance to overturn what they considered a 40-year-old mistake.

The two cases stemmed from a rule that was implemented by the National Oceanic and Atmospheric Administration (NOAA) which required fishing companies - like Loper Bright and Relentless Inc. - to pay out of their own pockets for human monitors to be aboard their ships at sea to make sure the fishing companies were in compliance with federal regulations and practices. NOAA had concluded that a fisheries management law - which was administered by NOAA - could be interpreted to require fishing companies to pay for the human monitors. The onerous cost of the monitors threatened the ability of the fishing companies to remain in business.

When the companies filed lawsuits against the NOAA rule, the lower federal courts relied on the Chevron Doctrine to uphold NOAA’s interpretation of the rule. After that, the cases were consolidated and went to the United States Supreme Court. By a 6-3 vote, the court did, indeed, overturn Chevron.

The majority opinion, written by Chief Justice John Roberts, opened by declaring, in no

uncertain terms, “Chevron is overruled.” Roberts went on to explain that, with this decision, “courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority...” The Court made clear that “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...defer to an agency interpretation of the law simply because a statute is ambiguous.”

Chief Justice Roberts said “Chevron was a judicial invention that required judges to

disregard their statutory duties. And the only way to ‘ensure that the law will not merely change erratically, but will develop in a principled and intelligible fashion,’ is for us to leave Chevron behind.”

Law professor Philip Hamburger, no fan of Chevron, wrote of the Court’s decision, “We are seeing a turning point in the fight against administrative power. Today, in Loper Bright and Relentless, the Supreme Court finally got rid of the Chevron doctrine, which for four decades required judges to be systematically biased in favor of the government in cases against Americans. So this is a great day for freedom against the administrative state.”

Of course, there are people who aren’t so thrilled that Chevron was overturned. One pundit claimed that the “Supreme Court has staged a coup, brazenly seizing power from the other two branches in a way that is utterly contrary to the framers vision of the role of a court and a judiciary.”

But law professor Glenn Harlan Reynolds disagrees, writing that if “Congress wants agencies to do things, it has to tell them to. If agencies think their statutes are inadequate to their purpose, they can ask Congress to amend them. Rather than a threat to democracy, this is a modest return of decision making to democratically elected legislators, and out of the hands of unelected bureaucrats.”

So “rather than ‘brazenly seizing power from the other two branches,’ the Supreme Court has returned power to Congress, where the Constitution put it to begin with. The brazen seizing, in fact, was undertaken by the unelected administrative state, what even FDR’s Commission on Administrative Government called a ‘headless fourth branch of government.’ And that was in 1937; there’s been a lot more seizing since then.”

Harlan went on to say, “Of course, the political class likes the administrative state for the precise reason it is constitutionally dubious - because it is not accountable to the voters. Instead, it is run by people like them, screening their often-subjective policy preferences behind confusing nomenclature, complex procedure, and (often dubious) claims of expertise. Like anything else that is a threat to the political class’s power or prestige, a return to something closer to constitutional government generates fear, hostility and - as we can see - over-the-top language.”

So as I said at the beginning, unless you’re a federal agency “expert,” an administrative lawyer, or, I guess, a herring fisherman, you likely didn’t notice that Chevron was overturned. But it’s a huge step toward dismantling the “headless fourth branch of government.” And that’s a victory for all of us.