At the end of June, in a case called Loper Bright Enterprises, et al. v. Raimondo, Secretary of Commerce, et al., the U.S. Supreme Court overturned precedent that had required courts for over 40 years to defer to federal agencies in how they interpreted the federal laws they are tasked with enforcing. Going forward, federal courts will no longer defer to agency interpretation and will instead interpret statutes based solely on their own independent judgment. While this may sound non-controversial (judges are supposed to judge, right?) it upends years of precedent under which courts have recognized the technical expertise agencies have when interpreting laws within their respective agency jurisdictions. Perhaps more immediately, the decision calls into question 40 years of case decisions that relied upon the now over-turned doctrine of deference. In short, we now don’t know what the law is for large segments of the United States Code and the Code of Federal Regulations. On top of that, the Court has left little help for guidance. Whereas before, businesses could look with confidence to the Equal Employment Opportunity Commission (EEOC) for guidance about the meaning of Title VII, just as an example, that is no longer the case.
As background, Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc. was a significant Supreme Court decided in the 1980’s. It required courts to defer to a federal agency’s own interpretation of a statute that it enforced with Congressional authority when that statute was ambiguous. This meant then when an agency such as the EPA, or the NLRB, or the EEOC spoke about what they understood a particular federal law meant and/or how it should be applied, the federal courts had to defer to that agency’s interpretation when ruling on the meaning of any federal law. The Court created this doctrine of deference, called Chevron deference, because the Court believed federal agencies understood better than the courts the technical subject matters of the laws that they were charged with enforcing. The EEOC, for example was a subject matter expert in employment law issues, while the NLRB had expertise in labor and wage issues, whereas the courts understand these topics only more generally. The Supreme Court has now completely reversed course and overturned the Chevron ruling and ended the doctrine of deference.
In the newly decided Loper Bright Enterprises case, the Supreme Court held that the Administrative Procedure Act (APA) requires courts to exercise their own independent judgment when deciding whether an agency has acted within its statutory authority, and that courts therefore may not defer to an agency interpretation of a law for any reason, even if the statute is ambiguous. In so holding, the Court reasoned that while federal agencies may understand the particular topic of the laws they enforce, Courts are the ones who are experts in interpreting laws. As the Court put it, federal agencies “have no special competence in resolving statutory ambiguities. Courts do.”
While that might sound unduly dismissive, the Supreme Court allowed that the federal courts may seek aid from the agency’s interpretation of a statute as part of the exercise of its judgment in interpreting the law. But the federal courts cannot “defer” to what that agency said the statute actually means. In other words, no matter how a federal agency has interpreted a statute, the court must decide on its own, using its own rules of statutory interpretation, what a statute means and in a way that “effectuate[s] the will” of Congress.
While this may seem academic, it is not. By rejecting the doctrine of deference, the Supreme Court has substantially weakened the powers of all federal agencies. Practically speaking, the decision means that an interpretation by the EEOC, for example, about how to comply with workplace and anti-discrimination laws like Title VII and the ADA, will have no conclusive legal effect. The EEOC’s interpretation of the laws it is charged to enforce has now become a mere opinion, like anyone else’s, and no longer reliable authoritative guidance for employers to follow. The lack of such authoritative guidance will increase rather than decrease risk for employers seeking to navigate their obligations under federal laws. For example, a business who in good faith follows EEOC guidance on how to avoid liability for gender-identity harassment, for example, now no longer has the same level of confidence that it had before about whether it has actually reduced its risk of liability, because the EEOC’s guidance no longer enjoys the deference from the courts it once had.
Case law will be king, and more idiosyncratic going forward, as the thousands of judges across the country will undoubtedly have differing views on the scope and meaning of federal laws. This could leave individuals and businesses waiting potentially years, until the Supreme Court resolve such disputes, to truly understand what some federal laws require. Deference to federal agency tended to modulate such differences in opinion. Now, it will be anybody’s guess. Monitoring case law developments and seeking legal counsel before making consequential business decisions have become even more important than ever.