On June 28, 2024, the Supreme Court overturned 40 years of precedent during which courts gave agencies deference when interpreting an ambiguous statute. This deference was the result of a 1984 Supreme Court case, Chevron v. Natural Resources Defense Council, Inc., 467 U.S. 837, in which the Court determined that due to the subject expertise within agencies, deference was merited.  In a 6-2 opinion (Justice Jackson did not participate) this activist Court decided that courts must exercise their own judgment and not defer to an agency’s when interpreting an ambiguous statute.  Loper Bright Enterprises v. Raimondo, 144 S.Ct. 2244, 2254 (2024)

Under Chevron, the Supreme Court developed what is colloquially known in the administrative arena as the “Chevron 2 step” to determine whether an agency’s interpretation was afforded deference. Under step 1, if the statute was clear then no deference. Under step 2, if the statute was not clear, courts were to defer to the agency’s interpretation as long as it was “based on a permissible construction of the statute.” Id. at 843. Accordingly, whenever an issue involved an agency’s interpretation of an ambiguous statute, the agency often won.

In both Looper and Relentless, the petitioners challenged the National Marine Fisheries Service’s (NMFS) new rule which amended the fishery management plan to require fishermen to pay for third-party observers when federal funding was not available. Thus, if NMFS determines that an observer is required, but will not pay for one, the vessel is required to contract with and pay for a government-certified third-party observer. The petitioners in both cases challenged the rule under Section 1855(f) of the Magnuson-Stevens Fishery Conservation and Management Act (MSA), 16 U.S.C. § 1855(f), which incorporates the Administrative Procedure Act (APA), 5 U.S.C. § 551, et seq. Specifically, the petitioners argued that the MSA does not authorize the NMFS to require fishermen to pay for observers. Relying on Chevron, both the D.C. Circuit and First Circuit ruled in favor of the government. The Petitioners then appealed to the Supreme Court, which granted certiorari to consider whether Chevron should be overruled. 

The Court first noted that courts have historically been the interpreter of ambiguous laws. The Court also recognized the need to afford “respectful consideration” to agencies because employees of agencies are “masters of the subject” and “draftsmen of the laws they were afterwards called upon to interpret.”  Id. However, the Court explained that “respect, though, was just that”. Id. The views of the Executive Branch could inform the judgment of the Judiciary, but did not supersede it.” Id. 

Under the APA, Congress was to implement “a check upon administrators”. Id. Relevant to the disposition of Loper and Relentless, Section 706 of the APA provides “the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action.” 5 U.S.C. § 706 (emphasis added). The APA further requires that courts “hold unlawful and set aside agency action, findings, and conclusions found to be . . . not in accordance with the law.” Id. at 706(2)(A). Based on APA’s language, the Court went on to state: 

The APA thus codifies for agency cases the unremarkable, yet elemental proposition reflected by judicial practice dating back to Marbury: that courts decide legal question by applying their own judgment. It specifies that courts, not agencies, will decide “all relevant question of law” arising on review of agency action—even those involving ambiguous laws—and set aside any such action inconsistent with the law as they interpret it.

Id. (emphasis and internal citations omitted). The Court noted that the APA makes no mention of Chevron’s deference to agencies when interpreting law but does provide agency deference for policymaking and factfinding. Based on the language contained in the APA, in conjunction with history, the Court concluded that “[t]he text of the APA means what it says. And a look at its history if anything only underscores that plain meaning.” Id. Accordingly, the Court reached the conclusion that “[t]he deference that Chevron requires of courts reviewing agency action cannot be squared with the APA.” Id. 

The Court’s conclusion makes intuitive sense. Courts have always been tasked with determining what the law is, including interpreting statutory provisions. Chevron appeared to be an exception to this general rule under the premise that agencies have the requisite experience that courts lack. However, as the Court writes Chevron “defies the command of the APA that the reviewing court—not the agency whose action it reviews—is to decide all relevant questions of law and interpret . . . statutory provisions.” Id. (internal quotations, citations, and emphasis omitted). Thus, the Court continued, “Chevron cannot be reconciled with the APA . . . by presuming that statutory ambiguities are implicit delegations to agencies.” Id. By overruling Chevron, the Court hands back, to the courts, their authority to interpret the law. 

So, what does this mean in the context of administrative litigation? Because the Court’s decision in these cases involved a federal agency and federal law (the APA), it provides guidance in the federal sphere of administrative litigation. Going forward, agencies will not get the automatic win they may have expected under the Chevron deference.  Pennsylvania never explicitly adopted the two-step Chevron deference but has historically followed a similar path in holding that “an agency’s interpretation of an ambiguous statute it is charged with enforcing is entitled to deference.” Seeton v. Pennsylvania Game Comm’n, 937 A.2d 1028, 1037 (2007). It will be interesting to see how Pennsylvania courts react to this turn in federal administrative jurisprudence.