Loper Bright And Corner Post Open Wide The Doors For Federal Court Challenges To Agency Interpretations Of Federal Law

Steptoe LLP


In more than 100 years of practice, Steptoe has earned an international reputation for vigorous representation of clients before governmental agencies, successful advocacy in litigation and arbitration, and creative and practical advice in structuring business transactions. Steptoe has more than 500 lawyers and professional staff across the US, Europe and Asia.
A pair of recent decisions by the US Supreme Court is likely to result in an avalanche of new litigation challenging agency interpretations of federal law.
United States Government, Public Sector
To print this article, all you need is to be registered or login on Mondaq.com.

A pair of recent decisions by the US Supreme Court is likely to result in an avalanche of new litigation challenging agency interpretations of federal law. The more significant of the cases, Loper Bright Enterprises v. Raimondo, No. 22-451, overturned the 40-year old doctrine of deference to reasonable administrative agency interpretations of ambiguous federal statutes announced in Chevron v. NRDC. The second, Corner Post v. Board of Governors of the Federal Reserve Sys., 22-1008, clarified that the six-year general statute of limitations applicable to administrative challenges does not begin to run until a rule is first applied to a party, meaning that long-settled federal rules might still be challenged by a newcomer to the regulated field. Taken together, the decisions may open the door to a slew of new cases challenging agency rules and regulations.

Loper Bright held that so-called Chevron deference was inconsistent with the Administrative Procedure Act (the "APA") and overruled the doctrine. Loper Bright (and a related case decided at the same time, Relentless) raised the question of whether a federal statute governing management of fishery resources authorized a federal agency to require herring fishing vessels to bear the cost of a federally-mandated onboard observer responsible for collecting data to ensure compliance with fishing management plans. The federal statute was silent on the question, leaving lower courts to conclude, under Chevron, that the statute was ambiguous and the federal agency's rule mandating fishing vessels bear the observer's cost was entitled to deference as a reasonable interpretation of the statute.

The Supreme Court granted review to decide whether Chevron should be overruled as inconsistent with constitutional separation of powers principles and with the APA, the 1946 statute governing judicial review of agency action. A six-justice majority, in an opinion written by Chief Justice Roberts, concluded that Chevron deference was inconsistent with fundamental principles of federal law granting the judiciary the authority to interpret the meaning of Congressional statute. "The Framers . . . envisioned that the final 'interpretation of the laws' would be 'the proper and peculiar province of the courts." Op. at 7 (quoting The Federalist No. 78 (Hamilton)). Thus, as Chief Justice Marshall famously concluded in Marbury v. Madison, "[i]t is emphatically the province and duty of the judicial department to say what the law is."

Though the Court has always insisted that it is the principal role of the judiciary to interpret federal law, it has "recognized from the outset . . . that exercising independent judgment often included according due respect to Executive Branch interpretations of federal statutes." "Such respect was thought especially warranted when an Executive Branch interpretation was issued roughly contemporaneously with enactment of the statute and remained consistent over time." Though respectful of agency's legal interpretations, historically, the courts ultimately decided questions of statutory meaning. "'Respect,' though, was just that. The views of the Executive Branch could inform the judgment of the Judiciary, but did not supersede it." Id. at 9.

When Congress enacted the APA in 1946, it delineated the basic contours of judicial review of agency action, including rulemaking. Section 706 directs that "[t]o the extent necessary to decision and when presented, 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." Id. at 13-14 (citing 5 U. S. C. § 706). "The APA thus codifies for agency cases the unremarkable, yet elemental proposition reflected by judicial practice dating back to Marbury: that courts decide legal questions by applying their own judgment." Id. at 14.

The Loper Bright Court held that Chevron was inconsistent with these fundamental principles and with APA Section 706's express direction that federal courts should decide legal questions relevant to federal statutes. The APA "specifies that courts, not agencies, will decide 'all relevant questions 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. at 14 (citation omitted). The majority reasoned that "Congress surely would have articulated a similarly deferential standard applicable to questions of law had it intended to depart from the settled pre-APA understanding that deciding such questions was 'exclusively a judicial function,'" id. (citation omitted), but "nothing in the APA hints at such a dramatic departure." Id.

The majority ultimately concluded that the "deference that Chevron requires of courts reviewing agency action cannot be squared with the APA." Id. The Chevron Court announce the doctrine of deference to an agency's reasonable interpretation of an ambiguous statute "[w]ithout mentioning the APA, or acknowledging any doctrinal shift." Id at 19. Thus, "[n]either Chevron nor any subsequent decision of th[e] Court attempted to reconcile its framework with the APA." Id. at 20. "The law of deference that th[e] Court ha[d] built on the foundation laid in Chevron had instead been heedless of the original design of the APA." Id. at 21 (cleaned up and brackets added). In short, 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. at 21. (citing 5 U.S.C. § 706). It requires a court "to ignore, not follow, 'the reading the court would have reached' had it exercised its independent judgment as required by the APA." Id. And Chevron requires much more than "respect" for an agency's views of the law; rather it, "demands that courts mechanically afford binding deference to agency interpretations, including those that have been inconsistent over time." Id.

In reviewing agency rules and other agency action, then, the majority directed that "courts must exercise independent judgment in determining the meaning of statutory provisions." That means that a court must determine the best interpretation of an ambiguous statute. Chevron, which mandates deference to the agency's interpretation of an ambiguous statute as long as it is reasonable, is inconsistent with this judicial role.

That does not mean, however, that an executive agency's views of the law will be entirely irrelevant moving forward. The Court preserves a role for respect to agency interpretations. In exercising their independent judgment, "courts may - as they have from the start - seek aid from the interpretations of those responsible for implementing particular statutes." Id. at 16. Federal agency interpretation of a statute within its authority "'constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance' consistent with the APA." Id. Thus,"[i]n an agency case in particular, the court will go about its task with the agency's 'body of experience and informed judgment,' among other information, at its disposal." Id. at 25. This is what has long been called ­Skldmore deference – a longstanding doctrine that pre-dated Chevron which held that an agency's views of statutory meaning, while not binding on the courts, are accorded to be accorded due respect based on their power to persuade. Id.

The majority recognized that agency "interpretations issued contemporaneously with the statute at issue, and which have remained consistent over time maybe especially useful in determining [a] statute's meaning." Id. at 16-17. And where a federal statute explicitly delegates an agency to exercise "a degree of discretion" to fill up the details of a federal scheme, the court "fulfills that role by recognizing constitutional delegations, fixing the boundaries of the delegated authority . . . and ensuring the agency has engaged in reasoned decision making within those boundaries." Id. at 18 (citations omitted; cleaned up).

In summarizing the holding, Chief Justice Roberts wrote:

The experience of the last 40 years has thus done little to rehabilitate Chevron. It has only made clear that Chevron's fictional presumption of congressional intent was always unmoored from the APA's demand that courts exercise independent judgment in construing statutes administered by agencies. At best, our intricate Chevron doctrine has been nothing more than a distraction from the question that matters: Does the statute authorize the challenged agency action? And at worst, it has required courts to violate the APA by yielding to an agency the express responsibility, vested in "the reviewing court," to "decide all relevant questions of law" and "interpret . . . statutory provisions." [Id. at 29 (quoting 5 U.S.C. § 706].

The Court concluded with a brief summary of its holding, making several points:

  • Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the APA requires.
  • Careful attention to the judgment of the Executive Branch may help inform that inquiry.
  • And when a particular statute delegates authority to an agency consistent with constitutional limits, courts must respect the delegation, while ensuring that the agency acts within it. But courts need not and under the APA may not defer to an agency interpretation of the law simply because a statute is ambiguous. [ at 35].

In a case that is not quite as far reaching, Corner Post held that a claim under the APA to challenge an agency action first comes into being when the plaintiff is injured by final agency action, not necessarily when the agency action (such as a final rule) is first promulgated.

The APA has a six-year statute of limitations to challenge agency rules. In the "Durbin Amendment" to the Dodd-Frank Act, Congress directed the Federal Reserve Board to adopt regulations implementing a reasonable debit card swipe fee, i.e., the fee that banks charge merchants to process a debit transaction. The Fed adopted rules in 2011; and if the six-year statute of limitations were applied based on when the rule was adopted, new cases challenging the rule on its face could not be brought after 2017. But Corner Post, a business that did not even exist at the time, argued that it would be fundamentally unfair to deprive it of its day in court simply because others had already had six years to challenge the rule. Corner Post concluded (in a 6-3 decision) that the six-year statute of limitations could not be strictly applied to deny a business that didn't exist when the rule was initially promulgated an opportunity to challenge the rule. Instead, it begins to run when the rule is first applied to the business

Especially read with Loper Bright, Corner Post has the potential to open up a range of settled rules to new challenge - by parties to which the rule did not apply at the time of adoption (because, like Corner Post, they were not in existence at the time). Corner Post may offer new opportunities to challenge some long-standing federal rules. But that opportunity may not be unlimited. Loper Bright warned, for instance, that the Supreme Court would not reconsider its prior decisions that had been decided under Chevron simply because Chevron had been overruled. The rule of statutory stare decisis – respect for settled precedent– would continue to control. It is likely that courts of appeals will adopt the same rule, meaning that the circuit courts are unlikely to reconsider settled decisions simply because Chevron has been overruled. But as Corner Post illustrates, it might be possible to challenge a rule in a different circuit where it had never been challenged before, as long as a new plaintiff could be found that has the rule applied to it for the first time within the last six years.

The result of both cases is likely to be an unsettled state of administrative law for some years. Loper Bright does not entirely throw out deference to agency interpretations– they still have a role in the analysis, but courts will ultimately make the decision of law. How lower courts will apply Loper Bright – whether it will entirely upset the apple cart or, alternatively, simply change the result of judicial review of agency rulemaking at the margins– remains to be seen. But Loper Bright is the most significant development in federal administrative law in some years. And Corner Post potentially broadens its practical reach, by allowing challenges to longstanding federal rules by newly affected parties. One thing is certain: the cases will lead to more litigation where federal agencies act against a background of ambiguous statutory authority and to a much busier docket for the next several years and beyond for both the Supreme Court and lower courts.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

See More Popular Content From

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More