Reining in the Regulators: Loper Bright Enterprises and the Chevron Decision

Amid decisions about presidential immunity and abortion pills, the Supreme Court heard a case regarding the overregulation of New England fishermen that may not seem important. However, the court’s decision in Loper Bright Enterprises v. Raimondo offers the promise of reducing the aggravation, expense, and intrusion of government regulation for almost every American business and citizen. Indeed, the hidden monetary costs of regulation are now running annually at $14,000 per family in the United States. A decision that reins in the costly government regulators is one that deserves our attention.

Why is this 6–3 decision, Loper Bright, involving commercial fishing already sending shock waves through the federal regulatory apparatus and producing loud objections from the pro-regulation Left?

The facts of Loper Bright vividly dramatize its impact upon a group of hardworking owners of fishing businesses that face what many American face, namely, regulatory overkill. Put briefly, in this case, National Marine Fisheries Service (NMFS), a federal agency that regulates the size of commercial fishing catches to prevent “over-fishing,” simply went too far. Fishing enterprises operating in New England waters, like the New Jersey-based, family-owned company Loper Bright Enterprises, had already put up with government observers required to be on board their vessels to assure compliance with limits on catches. If that was not enough, the NMFS decreed under new regulations that the fishermen must pay the salaries of the observers, which would cost each boat owner about $710 per day. That was too much to take without putting up a fight. Though Loper Bright Enterprises and other commercial fishing companies that joined in the lawsuit lost in the lower federal courts, the Supreme Court agreed to take their case and has now ruled in their favor, and therefore in favor of all overregulated Americans.

What did the Supreme Court do to tighten the reins on the regulators?

Since 1984, the courts had been governed by the language of a case called Chevron (Chevron U.S.A. Inc v. Natural Resources Defense Council). That case required the courts to follow a process when they were called upon to review federal agency regulations challenged in court by a business or individual refusing to accept regulations that seemed excessive. However, if the agency successfully claimed that the U.S. Congress had been silent or ambiguous in defining the powers of the agency, then the courts had to defer to the reasonable interpretation of the federal agency. Since “ambiguity” was relatively easy to find, often because Congress regularly produced poorly drafted legislation, the courts were put in the position of having to defer to the interpretation of the federal agency. Following the Chevron formula, called “judicial deference,” repeatedly meant a victory for the regulators and a loss for the citizen or business challenger.

In fact, in the Loper Bright case, the lower federal courts “deferred” to the NMFS using Chevron. Fortunately, the Supreme Court, long unhappy with Chevron, abandoned the Chevron approach, overruled it, and vacated (canceled) the holdings of the lower courts. That meant a win for Loper Bright and its fellow commercial fisheries in New England and a loss for the federal agency.

But what does Loper Bright mean for other American businesses and citizens?

It means that the four-decade-long “Chevron era” is now over. The Chevron case that quickly became the favorite of the federal courts, cited in a remarkable 11,760 judicial decisions and adding 1,000 new citations each year, is now a dead letter. Cases like Loper Bright, where an administrative agency claimed power well beyond what Congress intended, will be greatly diminished. The boldness of the regulators in grabbing more regulatory power will be made less likely.      

How did the court extricate itself from forty years of Chevron?

The Supreme Court opinion is both measured and hard-hitting at the same time. The substance of the opinion begins where most beginning law students start, with well-deserved attention to Chief Justice John Marshall’s opinion in the 1803 case of Marbury v. Madison. In that landmark case, Marshall declared that “[I]t is emphatically the province and duty of the judicial department to say what the law is.” For decades between Marbury and Chevron, it was the role of the federal courts under Article III of the Constitution to discern the meaning of a statute passed by the legislative branch. Even with the New Deal expansion of the administrative state, Chief Justice John Roberts reminds us in the Loper Bright decision, the courts “still adhered to the traditional understanding that questions of law were for courts to decide, exercising independent judgment.”

But there is more. Roberts cites the Administrative Procedure Act (APA) passed by Congress in 1946, clearly designed to check federal regulatory agency excesses. The opinion stresses that the APA warns agencies that it “remains the responsibility of the court to decide whether the law means what the agency says [it means].” Unfortunately, writes Roberts, the APA was basically ignored by Chevron. Simply put, “Chevron turns the statutory scheme for judicial review of agency action upside down.”

The decision in Loper Bright restores the rightful authority of the courts under Article III of the Constitution and the APA to engage in the interpretation of the statutes that Congress passed. This interpretative function is arguably the primary activity of the appellate courts. In Loper Bright, the court’s proper authority has been unambiguously returned to them. In case there is any doubt, the Roberts’ opinion bluntly refers to Chevron as misguided, flawed, unworkable, at odds with Article III, and the APA, fostering instability, and undermining of the rule of law. The message is pointed and unmistakable. The era of federal court deference to the interpretations of regulatory agencies is over. As Justice Neil Gorsuch puts it in his concurring opinion, “the court places a tombstone on Chevron that no one can miss.”

What will Loper Bright mean for the regulatory future?

First, it will likely produce a flurry of court challenges by businesses and individuals to proposed regulations, since the absence of Chevron will make the playing field between litigants and federal agencies more even.

Secondly, federal executive agencies — the EPA, the EEOC, OSHA, IRS, the NLRB, and the many other federal executive agencies — will be more cautious in drafting proposed new regulations under their rule-making powers now that they do not have the advantage that deference to their interpretations gave them under Chevron.

Will the overruling of Chevron create instability for prior decisions? Chief Justice Roberts makes the answer to that question clear: “We do not call into question prior cases that specific agency actions are lawful … despite our change in interpretive methodology.”

In summary, the courts will return to their proper interpretative role and the federal agencies will be required to stay within the powers given them by Congress, no less, but no more.

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