Chevron case: Supreme Court could take sledgehammer to agency power

The Supreme Court’s conservative majority may soon have a chance to dramatically limit the power of federal regulators.

In recent years, the justices’ high-profile cases have been on the frontlines of the culture wars as they decided issues like guns, abortion and religion. For the high court’s next term, however, administrative law is shaping up to be a focal point. 

The justices this week agreed to take up a case that asks them to overrule a 39-year-old precedent that gives federal agencies deference in rulemaking that Congress hasn’t clearly authorized. 

That decision could have wide-ranging impacts that scale back the executive branch’s authority to implement certain environment, employment, drug and other regulations when the justices decide whether to overrule the court’s 1984 decision in Chevron U.S.A. v. Natural Resources Defense Council, known as the Chevron deference.

It involves a two-part test to determine if a federal agency’s rule is authorized. First, a court determines whether Congress “has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter.” 

If Congress was ambiguous or silent, the court must defer to the agency and uphold its action if it was “based on a permissible construction of the statute.”

“I would think it's the most significant federal case of this era,” said Mona Dajani, global head of renewables, energy & infrastructure at Shearman and Sterling.

“And I would even argue it's bigger than Dobbs and Bruen. Some people will say Roe, I mean, so that's how major this is,” she added, referring to the Supreme Court’s landmark decisions on abortion and gun rights.

The test has become a bedrock of administrative law, and judges have cited it in more than 10,000 subsequent decisions, according to research by Columbia Law School professor Thomas Merrill.

Legal experts noted Chevron has been cited by both Democratic and Republican administrations in implementing regulations across the board, ranging from overtime pay to pollution to visa programs.

“The implication is, if we're not going to defer any more to them, that the members of Congress making laws have to be very specific on the legislation,” said Dajani. “And they have to address almost every possible contingency in a bill to have it passed, because the agencies will have no discretion.”

Unlike other federal courts, the Supreme Court chooses which cases it hears. The court’s move to hear the dispute — which required at least four justices to agree to do so — has given legal observers the strongest indication yet that Chevron may be at its deathbed, given past alarm bells voiced by some of the court’s conservatives.

“It's preordained, or a foregone conclusion, that by granting cert in this case, the conservative majority will limit the Chevron doctrine,” said Max Pritt, a partner at Boies Schiller Flexner, referring to the abbreviated legal term when four justices opt to take up a case. “The question is, how far will they go?” 

In a dissent from the court’s 2020 refusal to take up a separate regulatory case, Justice Clarence Thomas wrote that the deference gives agencies “unconstitutional power.”

“Perhaps worst of all, Chevron deference undermines the ability of the Judiciary to perform its checking function on the other branches,” Thomas wrote. “The Founders expected that the Federal Government’s powers would remain separated—and the people’s liberty secure—only if the branches could check each other. The Judiciary’s checking power is its authority to apply the law in cases or controversies properly before it.”

Justice Neil Gorsuch similarly cast doubts in November when he dissented from the court’s refusal to take up a veteran disability benefit dispute that invoked Chevron. 

“At this late hour, the whole project deserves a tombstone no one can miss,” Gorsuch wrote. “We should acknowledge forthrightly that Chevron did not undo, and could not have undone, the judicial duty to provide an independent judgment of the law’s meaning in the cases that come before the Nation’s courts. Someday soon I hope we might.”

Justice Brett Kavanaugh is also viewed as a skeptic, although it’s more unclear where the court’s other conservatives will land. Liberal Justice Ketanji Brown Jackson, who heard the dispute while sitting on a lower court, recused herself.

“Scaling back, I think, is the more likely outcome rather than outright overruling. There are a fair number of Chevron skeptics on the court, but again, that would be a very dramatic change,” said Tim Taylor, a partner at Holland & Knight.

The appeal headed to the nation’s high court arose out of herring fishing company Loper Bright Enterprises’s challenge to a National Marine Fisheries Service rule. The rule requires herring fishing boats to allow a federal observer aboard to oversee operations and compensate them for their time, and the company says the unauthorized rule hurts their profit margin.

“We are delighted that the Court took this case not only to potentially deliver justice to these fishermen, but also to reconsider a doctrine that has enabled the widespread expansion of unchecked executive authority,” former U.S. Solicitor General Paul Clement, who represents the fishermen, said in a statement.

Devin Watkins, an attorney at Competitive Enterprise Institute, which filed a brief supporting the fishermen, argued that the case demonstrates how powers expressly given to Congress, like the authority to impose duties, can be improperly taken over by agencies under Chevron in its current form.

“They forced these fishermen to pay money to government-mandated monitors to ensure that they comply with the law,” Watkins said. “That sounds to me a lot like law enforcement officers, people that are there to ensure the law is actually followed, and forcing people to pay for those law enforcement officers with no authorization from Congress to do so.”

The Justice Department, representing the agency, urged the justices not to take the case. 

“Federal courts have invoked Chevron in thousands of reported decisions, and Congress has repeatedly legislated against its backdrop,” the Justice Department wrote in a brief.

“Regulated entities and others routinely rely on agency interpretations that courts have upheld under the Chevron framework,” it continued. “By centralizing interpretive decisions in agencies supervised by the President, Chevron also promotes political accountability, national uniformity, and predictability, and it respects the expertise agencies can bring to bear in administering complex statutory schemes.”