No Fun to be Agency King, Not Anymore

Loper v. Bright Enterprise v. Raimondo, 2024 U.S. LEXIS 2882 *; 2024 WL 3208360 (U.S. 2024; Roberts. C.J.)

            Suppose three blind humans want to interpret a law.  One is a magistrate judge, one is a government bureaucrat, and one is a governed peasant.  The law applies to what is in yard A.  The judge goes into yard A and feels a hose (trunk), the bureaucrat feels a tree (leg), and the peasant feels an elephant.  The judge feels it’s nonsense to call it only a tree as other options include more.  But the bureaucrat says, no, just listen to me: “I am part of the government as ’Uncle Sane’.” What should the judge do?  Of course, if the three people can see, the answer is clear and no deference is needed.  The high court recently answered such questions.

            Federal agencies (e.g., EPA, Commerce, Veterans Admin., MARAD, etc.) used to enjoy much deference when taking their actions, including in interpreting the law (statutes and regulations)-normally a judicial function.  Frequently agencies had a free hand in shaping administration strategies.  Besides normal agency functions like rule-making and permitting, which results are normally judicially deferential to agencies.  This extra-legal, interpretative edge made agency heads like kings.  However, things have changed.

            In Loper v. Bright Enterprise v. Raimondo, 2024 WL 3208360 (U.S. 2024), a maritime fishery case, the Supreme Court held that courts must use “independent judgment” in determining open issues of statutory interpretation (who pays for fishery observers).  The agency interpretation alone may not always be incorrect, but the courts now have the independent final role with respect to the agency but without simply deferring to it.  The Court remanded the rule.  A harsh prospective blow to agencies and some public interest groups when the former “Chevron case doctrine”[1] for 40 years gave agencies’ interpretations judicial deference when statutes were open ended.  They may now be second guessed more frequently in courts by the regulated community.  Of course clarity in statutes (and rules) is possible, but regulatory laws are frequently vague to ensure their breath.

            Now this ruling does not affect judicial deference to agencies on fact finding in adjudications or policy in their permit decisions, as the Administrative Procedure[2] does grant agencies deference in those contexts when is it in the public interest to grant a permit.

            The Loper majority noted other recent rulings that affect agency rule making (delegated to agencies by statutes).  First, in West Virginia v. EPA, 597 U.S. 697 (2022), the Court struck down a Clean Air Act “major rule“ which had vast economic and social effects but lacked clear congressional authorization.  Next, in Kisor v. Wilke, 588 U.S. 558 (2019), the Court struck down deference to the Veterans Administration’s own ambiguous, legislative rule interpretation (of what are relevant records for disability), unless the rule was legally ambiguous, and the agency interpretation was fair, reasonable, within its expertise, and official.  Previously, an agency’s own rules interpretations were mostly simply deferred to by the courts without such a gauntlet of steps.  The Court remanded the VA rule.  These two rulings weaken a federal agency’s rule-making powers.  And Loper itself allows the former agency king to be nullified for doing legal wrongs to statutes. 

            On top of this triple play, the Court extended the time a rule can be judicially challenged from 6 years after it was promulgated to 6 years after it has injured a plaintiff (which would most always be later).  Corner Port v. Board of Governors Federal Reserve System, U.S. no. 22-1008 (2024).

            The upshot of these rulings creates more vulnerability in the agency rulemaking domain.  It creeps into agency enforcement for rule violations, and agency spins on its rules; and gives the courts more to say in the final word.  Hence, more rule litigation overall will result whenever a Congress is divided.  However, longer statutes and longer and more technical rulemaking can be anticipated as agencies attempt to shore up regulatory law (e.g., in many areas like tax, labor, health, securities, environment).  For instance, what will happen to quasi-maritime agency Vessel Incidental Discharge rules, NPDES vessel rules, OCS Clean Air Act rules, or OCS wind power rules?

            By Stan Millan, S.J.D., adjunct professor of law at Tulane LS and Loyola College of Law, and in private law practice.  Member of Louisiana and other Bars.  The views herein are the author’s alone.

            These ruling probably do not affect in the short run most state court deference to local agencies.

            See deference chart attached.

            See a List of the 2024 Spring Regulatory Agenda attached.

            See a copy of the opinion attached.

[1] See Chevron, U.S.A., Inc. v. NRDC, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984)

[2] See 5 U.S.C. §706.