The United States Supreme Court recently issued an important decision concerning administrative branch power – Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024). This article describes the Loper Bright Enterprises decision and discusses its implications.

The specific facts of the Loper Bright Enterprises case concerned a challenge by several family fishing businesses to a rule published by the National Marine Fisheries Service (a subsidiary agency of the United States Department of Commerce) that required these businesses to pay for federal onboard observers to monitor their fishing practices. More importantly, the Loper Bright Enterprises case involves the Supreme Court reviewing its “Chevron” doctrine. Based on the decision in the case of Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), the “Chevron” doctrine generally requires courts to defer to an administrative agency interpretation of a statute when the statute is silent or ambiguous and the agency’s interpretation is not unreasonable. The deference to administrative agency interpretations of statutes under the “Chevron” doctrine has been cited as a key factor in the expansion of administrative branch power in the United States. In fact, the lower courts in the Loper Bright Enterprises case applied aspects of the “Chevron” doctrine in ruling in favor of the National Marine Fisheries Service.

However, on June 28, 2024, when the Loper Bright Enterprises case came to the Supreme Court, the Supreme Court overruled the “Chevron” doctrine. Chief Justice John Roberts, in a 6-3 decision (with Justice Clarence Thomas (who also wrote a concurring opinion), Justice Samuel Alito, Jr., Justice Neil Gorsuch (who also wrote a concurring opinion), Justice Brett Kavanaugh, and Justice Amy Coney Barrett joining in the opinion, Justice Elena Kagan writing a dissenting opinion, Justice Sonia Sotomayor generally joining Justice Kagan’s dissenting opinion, and Justice Ketanji Brown Jackson specifically joining Justice Kagan’s dissenting opinion as to certain plaintiffs (but not the “title” plaintiff) in the case), delivered the opinion of the court, stating:

“Article III of the Constitution assigns to the Federal Judiciary the responsibility and power to adjudicate ‘Cases’ and ‘Controversies’ . . . The Framers also envisioned that the final ‘interpretation of the laws’ would be ‘the proper and peculiar province of the courts.’ . . . In the foundational decision of Marbury v. Madison, Chief Justice Marshall famously declared that ‘[i]t is emphatically the province and duty of the judicial department to say what the law is.’ . . . The views of the Executive Branch could inform the judgment of the Judiciary, but did not supersede it. Whatever respect an Executive Branch interpretation was due, a judge ‘certainly would not be bound to adopt the construction given by the head of a department.’ . . . Otherwise, judicial judgment would not be independent at all”.

“The New Deal ushered in a ‘rapid expansion of the administrative process.’ . . . But as new agencies with new powers proliferated, the Court continued to adhere to the traditional understanding that questions of law were for courts to decide, exercising independent judgment. . . . Nothing in the New Deal era or before it thus resembled the deference rule the Court would begin applying decades later to all varieties of agency interpretations of statutes. Instead [in 1946], Congress codified the opposite rule [under the Administrative Procedure Act (the “APA”)]: the traditional understanding that courts must ‘decide all relevant questions of law.’”.

“Congress in 1946 enacted the APA ‘as a check upon administrators whose zeal might otherwise have carried them to excesses not contemplated in legislation creating their offices.’ . . . 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. It 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. And it prescribes no deferential standard for courts to employ in answering those legal questions. . . . The APA, in short, incorporates the traditional understanding of the judicial function, under which courts must exercise independent judgment in determining the meaning of statutory provisions”.

“The deference that Chevron requires of courts reviewing agency action cannot be squared with the APA”.

“Neither Chevron nor any subsequent decision of this Court attempted to reconcile its framework with the APA. The ‘law of deference’ that this Court has built on the foundation laid in Chevron has instead been ‘[h]eedless of the original design’ of the APA”.

“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.’ . . . 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. . . . Perhaps most fundamentally, Chevron’s presumption is misguided because agencies have no special competence in resolving statutory ambiguities. Courts do. The Framers, as noted, anticipated that courts would often confront statutory ambiguities and expected that courts would resolve them by exercising independent legal judgment”.

“[D]elegating ultimate interpretive authority to agencies is simply not necessary to ensure that the resolution of statutory ambiguities is well informed by subject matter expertise. The better presumption is therefore that Congress expects courts to do their ordinary job of interpreting statutes, with due respect for the views of the Executive Branch”.

“The experience of the last 40 years has 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.’”.

“Four decades after its inception, Chevron has thus become an impediment, rather than an aid, to accomplishing the basic judicial task of ‘say[ing] what the law is.’ . . . Chevron accordingly has undermined the very ‘rule of law’ values that stare decisis exists to secure. . . . Chevron was a judicial invention that required judges to disregard their statutory duties. And the only way to ‘ensure that the law will not merely change erratically, but will develop in a principled and intelligible fashion,’ . . . is for us to leave Chevron behind”.

“Chevron is overruled. 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.”

The implications of the Loper Bright Enterprises decision can be enormous. Much of government decision-making, including in such critical areas as environmental law, energy regulation, and tax policy, is based on administrative agency interpretations of statutes. Under the “Chevron” doctrine, courts often were inclined to defer to these administrative agency interpretations. After the Loper Bright Enterprises decision, courts will be more likely to issue their own interpretations of statutes and not simply defer to the interpretations issued by administrative agencies. Thus, in the “battle” between judicial branch power and administrative branch power, the Loper Bright Enterprises case can be seen as a victory for judicial branch power. If you have been adversely affected by any administrative agency interpretation of a statute, the Loper Bright Enterprises decision potentially can provide support for you to commence litigation to challenge such administrative agency interpretation.

If you have any questions concerning the Loper Bright Enterprises case, please discuss them with your advisers.

Note – Extended January 13, 2025 “BOIR/FinCEN” Deadline

There have been various developments in the last month concerning the requirement of the Corporate Transparency Act that certain entities (“reporting companies”) must file a “Beneficial Ownership Information Report” (“BOIR”) with the United States Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) by January 1, 2025. On December 3, 2024, in the case of Texas Top Cop Shop, Inc. v. Garland, Civil Action No. 4:24-CV-478 (E.D. Tex. 2024), the United States District Court for the Eastern District of Texas issued a nationwide preliminary injunction that enjoined enforcement of the “BOIR filing” requirement of the Corporate Transparency Act. However, the U.S. Department of Justice appealed the Texas Top Cop Shop, Inc. decision. On December 23, 2024, the United States Court of Appeals for the Fifth Circuit, in an “Unpublished Order” in the Texas Top Cop Shop, Inc. case, granted a temporary stay of the District Court’s injunction pending appeal. In response to the Fifth Circuit ruling, FinCEN issued an “Alert”, stating in generally relevant part, “In light of a December 23, 2024, federal Court of Appeals decision, reporting companies, except as indicated below, are once again required to file beneficial ownership information with FinCEN. However, because the Department of the Treasury recognizes that reporting companies may need additional time to comply given the period when the preliminary injunction had been in effect, we have extended the reporting deadline as follows: . . . Reporting companies that were created or registered prior to January 1, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025.)”. Thus, subject to any possible further developments, reporting companies that were required to file a BOIR with FinCEN by January 1, 2025 before the District Court’s decision in the Texas Top Cop Shop, Inc. case are now again required to file a BOIR with FinCEN, except now they have until January 13, 2025 to file the BOIR with FinCEN to be in compliance with the Corporate Transparency Act.

If you have any questions concerning filing a BOIR with FinCEN, please discuss them with your advisers.

If you wish to discuss any of the above, find Pen Pal Gary’s contact info here.

Disclaimer: please note that nothing in this article is intended to be, or should be relied on as, legal advice of any kind. Neither LHBR Consulting, LLC nor Gary Stern provides legal services of any kind.