Future of “Chevron Two-Step” Judicial Deference to Administrative Agency Interpretations of Law is Now Before the U.S. Supreme Court
Donovan Estrada, Associate
On January 17, 2024, the U.S. Supreme Court heard oral arguments in two cases[1] which present the question of whether the Court should overrule, or at least clarify, its 1984 decision in Chevron, U.S.A., Inc. v. National Resources Defense Council, Inc. Under Chevron, federal courts are directed to defer to a federal agency’s interpretation of a statute that the agency administers if the statute is ambiguous and the agency’s interpretation is reasonable.[2] If the Court limits or upends Chevron, federal agencies would lose a significant degree of their interpretive authority, potentially leading to a shift in how statutes are applied and enforced.
The Influence of Chevron on Administrative Law
In Chevron, the Supreme Court directed lower courts to defer to federal agencies’ interpretations of statutes they are charged with administering under two conditions: First, the statute must be ambiguous, and second, the agency’s interpretation of the statute must be reasonable. If these conditions, often referred to as the “Chevron two-step,” are both satisfied, then the court should accept the agency’s interpretation, even if the court would have interpreted the statute differently on its own.
The holding in Chevron has impacted the way every major federal employment agency has exercised its authority. The Equal Employment Opportunity Commission (“EEOC”), Occupational Health and Safety Administration (“OSHA”), and the U.S. Department of Labor (“DOL”) all regularly invoke Chevron in defending regulations they have promulgated. Indeed, given the age of many labor and employment statutes (such as, for example, the Civil Rights Act of 1964 and the Fair Labor Standards Act of 1938), and the rapidly-evolving nature of the modern workplace, statutory ambiguities are often easy to identify given a particular situation, further empowering agencies to issue reasonable regulations under relatively low judicial scrutiny.
Supreme Court’s Examination of Chevron’s Validity
The challenge to the Chevron doctrine comes to the Supreme Court in a set of cases brought by a group of commercial fishing companies that have challenged a regulation issued by the National Marine Fisheries Service (“NMFS”). This regulation requires the fishing industry to pay for the costs of mandated observers who monitor compliance with fishery management plans. Relying on Chevron, Judge Judith Rogers of the U.S. Court of Appeals for the D.C. circuit rejected the companies’ challenge and explained that while the federal statute does not specifically address who must pay for monitors required under the statute, the NMFS’ interpretation of the law as authorizing industry-funded monitors was a reasonable one and the court should defer to that interpretation.
After considering the case at five consecutive conferences, the Supreme Court agreed to take up the case to determine whether the Chevron doctrine is constitutional. Justice Clarence Thomas has been a vocal critic of the Chevron doctrine, and has been joined by Justices Neil Gorsuch and Brett Kavanaugh, who have similarly publicly opposed the doctrine. Many in favor of overturning Chevron see the Supreme Court, which now has a 6-3 conservative supermajority, as their best bet for ending the doctrine at the federal level.
State-level Movements Against Chevron Deference
Twelve states have already weakened or overturned agency deference at the state level by either amending their respective administrative procedure acts (or, like Florida, its state constitution) to expressly prohibit heightened judicial deference to agency interpretations of statutes. Here in Colorado, in Nieto v. Clark’s Mark, Inc., the Colorado Supreme Court explicitly refused to grant agency deference to the interpretations of statutes by state agencies, such as the Colorado Department of Labor and Employment.[3] In so doing, the court emphasized the need for judicial oversight and analysis of agency regulations, rather than reliance on and deference to agency interpretations of law—even when such interpretations might otherwise be reasonable.
Employer Considerations
The overturning of Chevron at the federal level could fundamentally alter the landscape of how federal agencies enforce and interpret labor and employment laws, shifting significant interpretive power from these agencies back to the courts and further disrupting the already-fluid state of labor and employment law in Colorado and nationwide. Campbell Litigation will continue to closely monitor these developments and will provide updates accordingly.
[1] See Loper Bright Enterprises, Inc. v. Raimondo, 45 F.4th 359 (D.C. Cir. 2022); Relentless, Inc. v. United States Dep't of Com., 62 F.4th 621 (1st Cir. 2023).
[2] See Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 844 (1984).
[3] See Nieto v. Clark's Market, Inc., 488 P.3d 1140, 1149 (Colo. 2021).