The Supreme Court is Poised to Throw the Legal System into Turmoil By Limiting the Power of Federal Agencies

Nicholas Fortuna, February 29, 2024

This term the Supreme Court will determine the amount of deference that courts should give federal agencies’ interpretation of laws that they administer. The Court heard two cases, Relentless v. Department of Commerce and Loper Bright Enterprises v. Raimondo, challenging a federal rule that requires fisheries to pay salaries of compliance observers on their boats. The payment requirement is based on the interpretation of federal law by a federal agency, National Marine Fisheries Service. At issue, is a broader question: Whether the justices will do away with well-established precedent known as the Chevron doctrine that could severely limit the power of federal administrative agencies.

The doctrine is named after the Supreme Court’s 1984 opinion in Chevron v. Natural Resource Defense Council, which upheld a regulation issued by the Environmental Protection Agency. The Court set out a two-part test for courts to use in evaluating an agency’s interpretation of a statute it administers. The court must first determine whether Congress has directly addressed the issue. If it has not, the court will uphold the agency’s interpretation if it is reasonable.

The Supreme Court has already limited Chevron by creating procedural hurdles agencies must clear before invoking it. And in 2022, the Court formally embraced a new principle, the major questions doctrine, which requires agencies to point to clear textual authority before undertaking important policy initiatives.

Agencies do not just do big things; they do lots of small things. That is where the doctrine is most important.  A ruling tossing out Chevron would task judges to referee minor questions – including arcane, deeply technical matters that Congress has not expressly addressed but are the province of experts and specialists in government.

The issue looms large for federal regulators because the Chevron doctrine allows agencies to respond to current industry developments and shifting scientific technologies. For instance, financial regulators who may look to oversee cryptocurrency and artificial intelligence but are relying on statutes that predate the technologies to regulate them. Another example is environmental regulation, with agencies relying on the clean air and clean water acts that were enacted in the 1960s and 70s to address new chemicals, or to combat new pollution threats.

During oral argument, Justice Elena Kagan cited as an example a hypothetical bill to regulate artificial intelligence. Congress, she said, “knows there are going to be gaps because Congress can hardly see a week in the future.” So it would want people “who actually know about AI and are accountable to the political process to make decisions.” Courts, she emphasized, “don’t even know what questions are about AI,” much less the answers.

After oral arguments, it seemed that the Court is likely to limit the application of the Chevron Doctrine. Whether it throws it out completely is up in the air. If it does, Elizabeth Prelogar, the solicitor general of the United States, fears that it would result in an “unwarranted shock to the legal system,” as federal judges would be embroiled in intricate questions for which they lack the scientific, economic, or technical expertise, and the resulting slew of inconsistent lower court decisions leading to many appeals and inaction on important matters regulated by the federal government.

A decision by the Supreme Court is expected by June of this year.