The Supreme Court of the United States’ June 28, 2024, decision in Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024), dealt a blow to the “Chevron deference.” Loper Bright eliminated the judicial mandate that courts defer to an agency’s interpretation of ambiguous language in statutes administered by that agency. Notwithstanding, Loper Bright confirmed that courts can continue to accord respect to agency interpretations of law in certain circumstances.

Background

“Chevron deference” refers to a doctrine laid out in a 1984 Supreme Court ruling, Chevron v. Natural Resources Defense Council, 467 U.S. 837 (1984). Chevron mandated judicial deference to federal agencies with respect to agency interpretations of law if the statute was ambiguous and the agency’s interpretation was reasonable. In the years following, however, it remained unclear when Chevron deference should be applied. Court decisions repeatedly found ways to avoid Chevron and narrowed the circumstances in which the courts would defer to the agency.

The Supreme Court addressed Chevron head on in Loper Bright, which involved the owners of fishing companies challenging the National Marine Fisheries Service’s (“NMFS”) requirement that certain fishing boats have a government-approved inspector onboard to monitor compliance with applicable catch limits. Fishing companies incur the cost of hiring these inspectors. The fishing companies argued that NMFS had no authority to force companies to hire inspectors to assure NMFS compliance. The lower courts, applying Chevron, deferred to the agency, finding the law ambiguous on the issue and that NMFS’s interpretation was reasonable. The Supreme Court took up the case specifically to address Chevron.

Analysis

Loper Bright explicitly overruled Chevron and held that courts may not defer to an agency interpretation of the law, even if the statute is ambiguous. Citing The Federalist Papers promoting ratification of the Constitution and early cases in U.S. history, the Supreme Court stated that it is the court’s role to interpret the law.

The Supreme Court further outlined in Loper Bright that the Chevron deference doctrine is contrary to the Administrative Procedure Act (“APA”), which prescribes procedures for agency action and judicial review. With respect to questions of law, the APA codified decades of Supreme Court decisions and mandates that the courts, not agencies, must exercise their independent judgement and decide on all relevant questions of law, even ambiguous laws, with no deference to the agency. In contrast, the Supreme Court noted that the APA mandates deference to agency policymaking and factfinding and sets forth standards of judicial review of such actions (e.g., arbitrary, capricious, abuse of discretion, unsupported by substantial evidence).

Lastly, the Supreme Court’s decision in Loper Bright did not disturb the Skidmore doctrine. See Skidmore v. Swift & Co., 323 U.S. 134 (1944). The Skidmore doctrine provides that a court can look to agency interpretations, even on questions of law, for guidance, but not deference, if the court finds the agency’s reasoning to be persuasive. In making this determination, a reviewing court will consider factors such as the thoroughness evident in the agency’s interpretation, the validity of its reasoning, the interpretation’s consistency with earlier and later pronouncements, and any other factors that give it power to persuade. Therefore, agency interpretations of statutes can still be informative and persuasive.

What’s next?

Initial reactions to the overturning of Chevron have been draconian, with commentators predicting widespread litigation and potential overturning of nearly every type of agency action. As noted in Loper Bright though, the application of Chevron deference had been narrowed significantly over the years such that, prior to Loper Bright, it largely applied only to notice-and-comment rulemaking and formal adjudications. And, even then, there were numerous exceptions when Chevron deference was not applied. In other words, the Chevron deference would not have applied to many, if not most, types of agency action prior to Loper Bright. Rather, the standards that would have applied to challenges of agency action such as interpretive decisions and policy guidelines are the same standards that applied pre-Loper Bright and continue to apply post-Loper Bright: application of the APA and the Skidmore doctrine. Furthermore, the Supreme Court stated that earlier cases determined by application of Chevron deference, would not be automatically overturned.

There are, of course, areas in which Loper Bright has significantly altered the standard of review, which will likely prompt challenges and potentially result in overturning of agency action. This is primarily the challenge of agency regulations alleged to be improper interpretations of the law under which they are promulgated, which would have enjoyed the benefit of Chevron deference prior to Loper Bright.

As those operating in the maritime industry are no doubt aware, much “regulation” of the industry is done via policy or ruling letters, not notice and comment rulemaking. Many of the most controversial agency interpretations of statutes have not been incorporated in regulation, but are released through public interpretive decisions and rulings or guidance documents, such as U.S. Customs and Border Protection ruling letters interpreting the coastwise laws, U.S. Coast Guard Navigation and Vessel Inspections Circulars, or other policy documents, including determination letters issued related to U.S. citizenship or U.S. vessel build and rebuild. If challenged, these agency interpretations would not have received Chevron deference prior to Loper Bright. Rather, they would have been reviewed under the APA and Skidmore doctrine. New challenges of existing and forthcoming regulations, policies, or ruling letters/determinations are expected as parties seek to obtain the benefit of a truly independent review of an agency’s interpretation of the law, whereas prior many plaintiffs viewed challenging agency rulemakings to be a waste of resources due to the level of deference courts gave to the agency under Chevron.

Nonetheless, one potentially helpful aspect of the Loper Bright decision for those seeking to challenge this type of agency action is the Supreme Court’s clarification that statutory interpretation cannot receive the same deference afforded to policymaking under the APA simply because it is couched in policy. Accordingly, the court must first independently determine any questions of law on statutory interpretation within the policy and find the agency’s interpretation to be accurate before giving deference to the overall policy under the APA standard.

Conclusion

Chevron deference was a prominent principle of administrative law for 40 years, albeit narrowed and chipped away at over the years. Following Loper Bright, courts must exercise their own independent judgement on statutory interpretations, though it may accord respect to agency interpretations when it deems such interpretations persuasive.