Supreme Court Reigns in Federal Regulators

In a significant U.S. Supreme Court decision issued June 28, the Court reversed a 40-year-old legal precedent that required judges to accept federal agencies' reasonable interpretations of ambiguous or silent statutes, rather than apply the court's own interpretation.

In throwing out the so-called Chevron "deference doctrine," the Supreme Court has changed how courts will handle lawsuits involving challenges to agencies' interpretations of statutes they administer when specific agency actions are tested through litigation. The effect will rein in federal agencies' power and leeway to fill in the blanks dictating their authority to write detailed regulations implementing legislative statutes. From now on, courts must determine what statutes mean by employing traditional tools of statutory construction as they have always done. This decision may bode well for AGC's current litigation efforts to protect construction companies from federal agency overreach.

So what does this mean? Going forward, Congress will likely face increased pressure to write laws that clarify its intent and how it wants federal agencies to act in the rulemaking process. Put simply, they will be pressured to leave little to be interpreted by federal agencies. On the other hand, agencies will need to provide strong legal justifications for their rules and strictly follow Congress's direction to pass judicial review. Also, federal agencies will likely face more restrictions from rewriting regulations that impose different (flip-flopped) rules each time a new administration takes over.

What does AGC think will happen next? We expect more federal regulations to be challenged in courts, and judges will scrutinize agency actions more closely and exercise their independent judgment to decide whether an agency has acted within its statutory authority, as the APA requires. This could mean more inconsistent decisions by the lower courts. To be clear, the Supreme Court did not invalidate a myriad of federal regulations in their overturning the Chevron decision. Each rule will have to be challenged in court, and this will take time.

What was the specific case and what did they rule? Specifically, the Supreme Court overturned its ruling in a case called Chevron U.S.A. v. Natural Resources Defense Council (1984), concluding that Chevron is inconsistent with a law called the Administrative Procedure Act (APA). The APA, which governs federal rulemaking procedures, says that courts, not agencies, must decide "all relevant questions of law," even those involving ambiguous laws. And courts must set aside agency actions inconsistent with the governing statute, as interpreted by courts. The combined cases leading to this decision are Loper Bright Enterprises v. Raimondo, No. 22-451, and Relentless v. Department of Commerce, No. 22-1219, both decided on June 28.

The Court acknowledged that agencies still have a role in cases involving statutory interpretation, especially when they have "specialized experience." In these cases, courts may look to agency interpretations and give them due respect under cases like Skidmore (decided in 1944), taking into consideration factors such as whether the interpretation is roughly contemporaneous with a statute's enactment, the validity of the agency's reasoning, and consistency of the agency's interpretation over time. Agency interpretations may be informative, but they cannot bind reviewing courts, which is why Chevron went too far.

The Court emphasized that in overruling Chevron, it "do[es] not call into question prior cases that relied on the Chevron framework" even though the Court has changed its interpretive methodology. That prior cases relied on Chevron does not constitute a "special justification" for overruling those cases. Thus, at least for now, prior cases that applied Chevron deference still stand.

AGC is actively challenging government overreach in the courts and pushing back against a suite of new costly and onerous federal regulations that were promulgated based on an expansive reading of statutory authority, including U.S. DOL's new Davis-Bacon Prevailing Wage Rule; U.S. EPA's new PFAS Superfund Rule; U.S. OSHA's new Walkaround Representative Rule; NLRB's new Joint Employer Rule; and U.S. EPA and USACE's definition of Waters of the United States - learn more.

Keep up with the latest AGC Judicial Advocacy News. Listen to AGC's ConstructorCast to learn more about the intricacies of the association's litigation program. To support AGC's litigation efforts, please consider making a corporate donation to our Construction Advocacy Fund.

Please contact Leah Pilconis for more information.

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