Supreme Court Substantially Alters Review Framework For Federal Administrative Agencies

3 minute read | July.01.2024

The U.S. Supreme Court has issued its decision in Loper Bright Enterprises v. Raimondo, a case with significant implications for the way federal courts review administrative agency decisions.

The ruling overturns a 1984 decision that led federal courts to defer to administrative agencies in interpreting ambiguous statues.

The 1984 case – Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc.became one of the most important cases in administrative law, cited thousands of times.

The Chevron doctrine was based on the idea that when Congress passes a statute ambiguous enough to have multiple interpretations, it implicitly delegates to agencies enforcing the statute the authority to resolve the ambiguity based on their expertise.

Courts to Resolve Statutory Ambiguity Without Deference

The Supreme Court’s decision in Loper Bright Enterprises v. Raimondo rejects Chevron’s core premise. It requires courts to decide the meaning of ambiguous statutes without deferring to an agency’s interpretation.

The majority opinion explains that the assumption that statutory ambiguities are implicit delegations “does not approximate reality.”That is because, in the Court’s view, “statutory ambiguity does not necessarily reflect a congressional intent that an agency, as opposed to a court, resolve the resulting interpretive question.”

The majority also rejected the idea that agencies are better positioned than courts to interpret statutes relevant to their expertise, observing that “agencies have no special competence in resolving statutory ambiguities. Courts do.” The majority also said it considered Chevron unworkable because determining whether statutory language is ambiguous was never simple.

As a result of the Supreme Court’s decision, a court will need to interpret statutory language it finds ambiguous without deferring to the agency’s view.

Notably, the Court went out of its way to say that it is not calling into question prior cases that relied on the Chevron framework. So final decisions based on Chevron are not likely to be reopened.

The Decision Does Not End All Deference to Administrative Agencies

This decision marks a big change, but it does not end deference to administrative agencies in other important respects.

Perhaps most importantly, the Court did not cast doubt on the principle that courts should defer to agencies’ factfinding. Similarly, the Court emphasized that courts must respect and draw on agencies’ experience and knowledge of the industries they regulate. Thus, nothing in the decision will change the deference courts owe to findings of fact by an agency, especially when those findings relate to the agency’s expertise and its experience and knowledge of the regulated industry.

The Court preserves the principle that courts should approach statutory interpretation questions “with the agency’s ‘body of experience and informed judgment,’ among other information, at its disposal.” The Court explained that even though an agency’s interpretation of a statute is not binding, “it may be especially informative” if it “‘rests on factual premises within [the agency’s] expertise.’”

The decision also preserves deference to agencies’ decisions where Congress has explicitly delegated authority. The Court recognized that “some statutes expressly delegate to an agency the authority to give meaning to a particular statutory term.” And it noted that other statutes “empower an agency to prescribe rules to ‘fill up the details’ of a statutory scheme … or to regulate subject to the limits imposed by a term or phrase that ‘leaves agencies with flexibility.’”

Going forward, courts may still defer to the decisions agencies make pursuant to congressional delegations. The Court explained, “when the best reading of a statute is that it delegates discretionary authority to an agency, the role of the reviewing court” is to “effectuate the will of Congress subject to constitutional limits,” which requires the court to “recogniz[e] constitutional delegations, fix[] the boundaries of the delegated authority, and ensur[e] the agency has engaged in reasoned decision-making within those boundaries.”