Last Updated on July 10, 2024

On Friday June 28, 2024, in a landmark decision that has reverberated through the legal and business communities alike, the United States Supreme Court overturned the 1984 Chevron deference. This doctrine, established in the 1984 case Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., has long been a cornerstone of administrative law, defining the extent to which courts should defer to federal agencies’ interpretations of ambiguous statutes. 

The doctrine was overturned in response to Loper Bright Enterprises v. Raimondo and Relentless Inc. v. Department of Commerce in a 6-3 decision. Two fishing vessel operators challenged federal regulations on fishery management on federal waters, ultimately leading to the overturning of the Chevron doctrine.  

Background: The Chevron Doctrine

The Chevron doctrine required courts to defer to agency regulations if the statute’s language was ambiguous and the agency’s interpretation was reasonable. The Chevron doctrine outlined a two-step framework for judicial review of agency interpretations of statutes:  

Step One: Courts must determine whether Congress has directly spoken to the precise question at issue. If so, courts must follow Congress’s intent as expressed in the statute. 

 Step Two: If the statute is ambiguous or silent on the issue, courts must defer to the agency’s interpretation of the statute, as long as it is reasonable. 

This doctrine has provided federal agencies with significant leeway in interpreting and implementing statutes, leading to predictability in regulatory frameworks and promoting administrative efficiency, more-or-less depending upon who was in office at that time.  

The Supreme Court’s Rationale for Overturning Chevron

In a closely watched case, the Supreme Court has now altered the landscape created by the Chevron doctrine. The Court’s decision marks a departure from decades of precedent and holds potential implications for regulatory policy, business operations and legal strategy. 

In the latest MyHRBuzz podcast episode, Wendy Shelton, of Nippes, Healy and Gault, PLLC, discussed that in “towards the last 40-year reign of Chevron deference, it has been whittled away at and the Supreme Court itself had not deferred to an agency’s interpretation since 2016, although the lower courts were using it frequently.” 

In recent years, the Chevron Doctrine has faced criticism for an assortment of reasons, including concerns over excessive deference to agencies and its impact on judicial independence.

Key Factors Contributing to The Supreme Court’s decision to overturn Chevron:

1. Judicial Role: The Court has expressed a renewed focus on the judiciary’s role in interpreting statutes and ensuring adherence to congressional intent. Overturning Chevron allows courts greater latitude in independently reviewing and interpreting statutory provisions without deferring automatically to agency interpretations. 

2. Clarity and Predictability: Critics of Chevron argued that it led to inconsistency and unpredictability in regulatory outcomes, as agencies could change interpretations with varying administrations. By reducing deference, the Court aims to provide clearer guidance on statutory interpretation and promote stability in regulatory enforcement. 

3. Separation of Powers: The decision reflects concerns over the separation of powers, emphasizing the judiciary’s duty to independently interpret laws and check potential overreach by executive branch agencies. This shift underscores a commitment to maintaining a balanced system of government where each branch exercises its designated authority without undue influence from another. 

Bill Gault spoke the overturning of Chevron from a practical standpoint, stating that “rather than federal agencies going into federal court with this benefit of deference…they’re now going into federal court on an equal playing field…because the courts are no longer going to afford them deference. They can consider what the agency ruling was, but it’s not controlling any longer. The courts are Article III courts, and they are required to independently interpret the law. Which, under the Chevron doctrine, been deferred to the federal agencies.” 

How Will This Affect Employers?

While there aren’t immediate ramifications, the overturning of Chevron deference could have significant implications for employers, particularly in regulatory compliance and legal challenges, as time progresses. Here’s how it might affect employers moving forward: 

1. Increased Uncertainty in Regulatory Interpretations: Chevron deference traditionally allowed courts to defer to federal agencies’ interpretations of ambiguous statutes if they were reasonable. Without Chevron deference, courts may be more inclined to independently interpret statutes, potentially leading to varying interpretations across different jurisdictions or over time. This could create uncertainty for employers trying to navigate complex regulatory frameworks.  

2. Greater Legal Challenges and Litigation: With less deference to agency interpretations, employers may be more inclined to challenge regulatory decisions in court. This could result in increased litigation as stakeholders seek clarity on regulatory requirements and enforcement actions. 

  3. Impact on Regulatory Compliance Strategies: Employers may need to reassess their compliance strategies and interpretations of regulatory requirements more frequently. Without Chevron deference, regulatory guidance and agency rulings could be subject to greater scrutiny and potentially overturned, requiring adjustments in compliance practices. 

  4. Potential for Shifting Regulatory Landscape: The absence of Chevron deference could lead to a more fluid regulatory environment as courts and agencies navigate statutory interpretations. Changes in administrations or judicial precedents could influence how regulations are enforced and interpreted over time, impacting how employers manage compliance and operational strategies. 

  5. Need for Increased Legal Counsel and Expertise: Employers may find it necessary to rely more heavily on legal counsel and regulatory experts to navigate the evolving regulatory landscape. Understanding and adapting to changes in statutory interpretations and enforcement priorities could become more resource intensive. 

What Can Employers Expect to See?

 Looking forward, the decision has the potential to affect any pending legal challenges to an array of federal agency rules, including the DOL’s new Overtime Rule, the FTC’s new rule banning noncompetes, and OSHA’s new walkaround rule.  However, just because a ruling is upheld in one court, does not mean it will be upheld in another, which could lead to compliance issues for companies down the road. Employers must stay on top of any developing cases, and must utilize their resources, such as MyHRConcierge, to remain compliant amongst the changing regulatory landscape. 

During the “Beyond the Bench: Chevron Overturn & Employer Impact” podcast episode, Chris Cooley, Bill Gault and Wendy Shelton discussed what employers can expect to see with the overturning of Chevron. The rulings may ultimately come down to where employers are located geographically, in terms of which circuit court the case will take place in. 

 Chris Cooley mentioned that it seems like “…at a really high level, essentially what’s going to happen is more than likely you’ll have a little less aggressive agencies” and that “if you do have a little less perceived harm, we’ll probably see more cases fighting those agency regulations when it is deemed or perceived that they’ve overstepped their boundaries, because they probably have a little better of a case to (win) those now,  if there has been that harm.” 

Cooley also mentioned that “maybe not at the supreme level, but at the lower level, employers may have more of an ability to fight some of those perceived harms when those rulings and regulations come down.” 

Stay Up-to-Date on Changing Laws and Regulations with MyHRConcierge 

The Supreme Court’s decision to overrule the Chevron doctrine marks a significant shift in administrative law jurisprudence. While the full ramifications of this decision will unfold over time, employers everywhere must adapt to the evolving regulatory and judicial landscape. Understanding these implications will be crucial in navigating the complexities of modern governance and regulatory compliance. 

MyHRConcierge can help you stay up-to-date and compliant with complex ever-changing laws and regulations. For expert guidance on navigating the regulatory landscape as an employer contact MyHRConcierge at 855-538-6947 ext.108, ccooley@myhrconcierge.com today. Or, schedule a convenient consultation below: