Earlier today, the Supreme Court issued a landmark opinion in Loper Bright Enterprises v. Raimondo, overruling the dubbed ‘Chevron standard’. The Chevron standard resulted from the 1984 case, Chevron v. Natural Resources Defense Council, 467 U.S. 837 (1984), and, for over 40 years, provided the basis for how courts reviewed administrative agency decisions. Chevron created a two-step process to review an agency’s interpretation of the laws they implement. First, a court must determine whether Congress clearly expressed their intent in the statute, and if the statute’s intent is ambiguous. If Congress’ intent is ambiguous within the statute, the second Chevron step requires the court to determine if the agency’s interpretation was reasonable. If the agency’s interpretation of the ambiguous statute is reasonable, the court must give deference to the agency’s interpretation. Proponents of the Chevron standard argue that agencies entrusted with enforcement and implementation of a law should have deference to fill any gaps left by Congress in such law because of their unique expertise and experience in the technical subject matter. Chevron challengers argue that courts are constitutionally tasked with interpreting the law, and Chevron abdicates that responsibility.
The Supreme Court’s opinion issued today addresses challenges to a 2020 federal regulation which required owners of fishing vessels in the Atlantic Herring Fishery to pay for monitors while at sea. The National Marine Fisheries Service (NMFS) relied on the 1976 Magnuson-Stevens Fishery Conservation and Management Act (MSA) to create industry-funded monitoring requirements. The fishing companies challenged the NMFS’s authority to mandate these monitoring requirements. The United States Court of Appeals for the First Circuit (First Circuit) and the United States Court of Appeals for the District of Columbia (D.C. Circuit) in separate appeals challenging the same NMFS monitoring rules, applied the Chevron deference to NMFS’ interpretation of the MSA as allowing the agency to mandate monitoring requirements funded by owners of regulated vessels. In its opinion today, the Supreme Court vacates the decisions of the First Circuit and the D.C. Circuit because they relied on Chevron. The Supreme Court makes clear that courts must exercise their independent judgement, and not give deference to the agency, in deciding whether an agency has acted within its statutory authority. Even when a particular statute delegates authority to an agency, courts must respect the delegation while ensuring that the agency acts within it, and without deferring to an agency’s interpretation of the law simply because a statute is ambiguous.
How may this opinion impact the FERC and those of us who practice before it? FERC is a federal agency that has often relied on, and benefited from, the deference afforded it under Chevron in its interpretation of the Federal Power Act, the Natural Gas Act and the Public Utility Regulatory Policies Act. See, e.g., South Carolina Public Service Authority v. FERC, 762 F.3d 41 (D.C. Cir. 2014), and Solar Energy Industry Ass'n v. FERC, 80 F.4th 956 (9th Cir. 2023). Going forward, without the deference to its expertise afforded under Chevron, FERC decisions will likely face increased scrutiny in the Court of Appeals on matters of agency interpretation.
For more information regarding the Supreme Court’s decision, please contact Lisa S. Gast, Peter J. Scanlon, Sean M. Neal, Bhaveeta Mody, R. Keith Gordon, or Andrea Sarmentero Garzón.
