The U.S. Supreme Court has agreed to hear a case in which the petitioners are challenging the continued viability of the Chevron framework that courts typically invoke when reviewing a federal agency’s interpretation of a statute. While Loper Bright Enterprises, et al. v. Raimondo involves a regulation of the National Marine Fisheries Service (NMFS), the Supreme Court’s decision could have significant potential implications for when courts should give deference to regulations issued by all federal agencies, including the CFPB, FTC, and federal banking agencies.
The Chevron framework derives from the Supreme Court’s 1984 decision in Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc. Under the Chevron framework, a court will typically use a two-step analysis to determine if it must defer to an agency’s interpretation. In step one, the court looks at whether the statute directly addresses the precise question before the court. If the statute is silent or ambiguous, the court will proceed to step two and determine whether the agency’s interpretation is reasonable. If it determines the interpretation is reasonable, the court will ordinarily defer to the agency’s interpretation.
The petition for certiorari was filed by four companies that participate in the Atlantic herring fishery. The companies had filed a lawsuit in federal district court challenging a NMFS regulation that requires vessels that participate in the herring fishery to pay the salaries of the federal observers that they are required to carry. The Magnuson-Stevens Act (MSA) authorizes the NMFS to require fishing vessels to carry federal observers and sets forth three circumstances in which vessels must pay observers’ salaries. Those circumstances did not apply to the Atlantic herring fishery.
Applying Chevron deference, the district court found in favor of NMFS under step one of the Chevron framework, holding that the MSA unambiguously authorizes industry-funded monitoring in the herring fishery. The district court based its conclusion on language in the MSA stating that fishery management plans can require vessels to carry observers and authorizing such plans to include other “necessary and appropriate” provisions. While acknowledging that the MSA expressly addressed industry-funded observers in three circumstances, none of which implicated the herring fishery, the court determined that even if this created an ambiguity in the statutory text, NMFS’s interpretation of the MSA was reasonable under step two of Chevron.
A divided D.C. Circuit, also applying the two-step Chevron framework, affirmed the district court. The majority concluded that under step one of Chevron, the statute was not “wholly unambiguous,” and left “unresolved” the question of whether NMFS can require industry to pay the costs of mandated observers. Applying step two of Chevron, the majority concluded that NMFS’s interpretation of the MSA was a “reasonable” way of resolving the MSA’s “silence” on the cost issue.
The Supreme Court granted certiorari to consider the second question presented in the companies’ petition for certiorari. That question is:
Whether the Court should overrule Chevron or at least clarify that statutory silence concerning controversial powers expressly but narrowly granted elsewhere in the statute does not constitute an ambiguity requiring deference to the agency.
In their petition, the companies argue that the majority misapplied Chevron by not concluding that the MSA was unambiguous regarding the NMFS’s authority to require industry funding of mandated observers. They further argue that if the D.C. Circuit decision is consistent with Chevron, the Supreme Court should overrule Chevron or at least clarify its limits, “particularly by explaining that silence does not create ambiguity when the claimed power is granted expressly elsewhere in the statute.” They assert that decades of practice have exposed Chevron’s “many flaws,” which include weakening the judiciary by taking away the courts’ ultimate interpretive authority and encouraging “the executive’s aggrandizement at the expense of the judiciary, Congress, and the citizenry.”
Last Term, in West Virginia et al. v. Environmental Protection Agency et al., the Supreme Court invoked the “major questions doctrine” to strike down an EPA regulation. Many observers view that decision as a step by the Court’s conservative majority towards cutting back on Chevron agency deference.