As defined in the Administrative Procedure Act, an “agency” is essentially any federal governmental authority other than Congress, the courts, or the military. Housed within the executive branch, these agencies implement and enforce the will of Congress. The idea is that Congress enacts laws and provides broad policy direction; the agencies, populated with subject-matter experts, fill in the gaps consistent with this legislative direction.
However, Congress is not always clear. This ambiguity often requires agencies to interpret intent. For 40 years, the law of the land was the Chevron Doctrine, based on the Supreme Court’s decision in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984): If an agency’s interpretation is reasonable, then courts must defer to them. Then, a group of North Atlantic commercial herring fishers got involved, reeling in this decades-long judicial deference through the Supreme Court’s recent decision in Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024).
The Rise of Chevron
As part of the 1970 Clean Air Act, the U.S. Environmental Protection Agency (EPA) established National Ambient Air Quality Standards. These standards are the foundation of the Clean Air Act, establishing limits on the concentration of pollution in the outside air that we breathe. The limits protect public health, including the health of sensitive populations such as children, the elderly, and those with asthma and other respiratory ailments. The limits also protect general welfare, including from property damage.
The EPA has set maximum ambient concentrations for six different air pollutants. They include carbon monoxide, ground-level ozone, particulate matter, nitrogen dioxide, sulfur dioxide, and, most recently, lead, which was added in 1978. These air pollution limits are uniform, applying equally across the country regardless of population, land use, or meteorology. Therefore, the limits in Big Sky, Montana, are the same as in Detroit, Michigan, for example.
Most states are in compliance with these EPA limits, while some others are not. Not surprisingly, the non-attainment states are subject to more stringent regulations and permitting requirements, particularly when attempting to add new sources of pollution to an already out-of-compliance area.
This one-size-fits-all approach can stifle innovation, modernization, and development. To compensate, EPA regulations provide some accommodations for non-attainment states. For instance, with regard to power plants, the EPA allows non-attainment states to adopt a plantwide definition of “stationary source.” Under this definition, and according to EPA, as long as the total air pollution emissions do not increase, a power plant is free to make adjustments and modifications within the facility. For example, a fossil-fuel-fired electric power plant can draw an imaginary bubble around the entire facility. Assuming the total tons of air pollution emitted annually do not increase, the facility could modify within that bubble as it saw fit. Say the plant wants to add a new electric generating unit while ramping down an older existing one or switch to burning heavier fuel while replacing existing burners with more efficient ones. If there is no net increase in air pollution, the facility would not trigger the more stringent permitting requirements.
However, because Congress did not explicitly define “stationary source” in the Clean Air Act, the Natural Resources Defense Council (NRDC) challenged, claiming EPA’s interpretation was contrary to law. In a 6-0 decision, with Justices Thurgood Marshall, Sandra Day O’Connor, and William H. Rehnquist not participating, the U.S. Supreme Court, in the 1984 case Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., held that the EPA’s definition was, in fact, a permissible construction of the statutory term.
More importantly, the Court established a two-step test. First, if Congress has spoken clearly on the issue, the agency must follow congressional direction. However, if Congress did not, courts should defer to the agency’s interpretation if it is reasonable and even if a court disagrees with that legal interpretation. The 1984 decision and the two-step test became known as the Chevron Doctrine.
Chevron’s Impact
The Chevron Doctrine stood for four decades. It has been cited more than 10,000 times in court opinions, journal articles, and legal documents. Its impact is profound, dramatically influencing the relationship between the three branches of government. The Chevron Doctrine gives broad deference and discretion to administrative agencies. Essentially, they can act as legislative interpreters in deciding how to implement and enforce the law. Although it arose in the context of environmental law, Chevron affects all federal administrative agencies.
Administrative agencies were created in the late 19th century with the intent to provide greater protection and oversight of business practices. One of the first agencies was the Interstate Commerce Commission, created in 1887 to curtail the railroad industry’s growing power. Another was the Federal Trade Commission, created in 1914 to protect consumers and prevent anticompetitive business practices such as monopolies and false advertising. The Federal Reserve, National Labor Relations Board, Social Security Administration, EPA, and many others followed.
However, with this expansion of power came a fear of government intrusion into everyday life. There were concerns that the government was being run by agency administrators usurping the authority of elected representatives, giving them a more direct impact on the people than the officials these citizens elected for representation.
As might be predicted, not everyone was pleased with the Chevron decision, particularly the regulated community. Complaints about agency overreach were commonplace. Agencies were alleged to be acting ultra vires, legislating without the requisite congressional authority. Agencies were accused of taking advantage of gaps, silence, or vagueness in the law to expand their authority beyond what was actually needed or intended.
The Loper petitioners challenged a rule issued by one particular administrative agency, the National Marine Fisheries Service, on just such grounds.
The Magnuson-Stevens Act and the National Marine Fisheries Service
In the early 1970s, unregulated foreign vessels exploited fishing in the international waters off the U.S. coast, jeopardizing the sustainability of domestic fisheries. At the time, international waters began at just 12 nautical miles offshore. To prevent overfishing, Congress enacted the Magnuson-Stevens Fishery Conservation and Management Act (MSA) in 1976. The MSA and subsequent amendments significantly extended jurisdiction out to 200 nautical miles. The National Marine Fisheries Service (NMFS) was charged with administering the MSA under the Department of Commerce.
Along with the creation of eight fishery management councils, the MSA imposed various requirements for ensuring the sustainable harvest of fish, including the length of the season, number of fish that may be caught, method of catch, reporting, set-aside for scientific research, and more. Additionally, to monitor compliance, fishery management plans could require independent observers to be carried on board, depending on the type of commercial fishing enterprise. The MSA specified three groups that must cover the costs associated with these at-sea observers: (1) foreign fishing vessels operating within the exclusive economic zone, (2) vessels participating in certain limited-access privilege programs, and (3) vessels within the jurisdiction of the North Pacific Fishery Management Council. However, the MSA did not address whether Atlantic herring fishers may be required to bear the costs associated with the observers.
At one point, the NMFS fully funded the costs of the observers that the New England Fishery Management Council required for the Atlantic herring fishery. However, in 2013, the Council proposed amending its fishery management plans to require fishers to pay for their own observers should federal funding become unavailable, which it eventually did. The NMFS estimated that the cost of an observer was as much as $710 per day, thereby reducing annual returns to the vessel owner, in some cases by up to 20 percent. Several years later, NMFS officially promulgated the rule requiring fishers to pay the cost of these government-mandated observers.
Challenges to the Observer Rule
The Loper petitioners were family-owned businesses operating in the Atlantic herring fishery. In February 2020, they challenged the observer rule. They argued the MSA does not authorize the NMFS to mandate that North Atlantic herring fishers pay for the required observers on their boats. They pointed to the fact that the MSA explicitly states that certain classes of boats must pay the cost for their own observers but does not include herring boats on that list, making it clear that Congress did not intend for herring fishers to cover the cost. The district court, however, granted summary judgment to the government. It concluded that the MSA authorized the new rule and noted that even if it was ambiguous, deference to the agency’s interpretation would still be warranted under Chevron. A divided panel of the D.C. Circuit affirmed.
Meanwhile, another group of petitioners who owned vessels in the Atlantic herring fishery filed suit in Relentless, Inc. v. Department of Commerce, challenging the same rule. The district court, as in Loper, deferred to the NMFS’s interpretation under the Chevron Doctrine and granted summary judgment, with the First Circuit affirming.
The Fall of Chevron
The U.S. Supreme Court granted certiorari in both cases and limited the question to whether Chevron should be overruled or clarified.
The Court relied in part on Article III of the Constitution, which assigns to the federal judiciary the responsibility and power to adjudicate cases and controversies. The Court stated that the framers of the U.S. Constitution fully recognized that the laws that courts would need to analyze and apply in resolving disputes would not always be clear. However, the framers envisioned that the final interpretation would be the proper and peculiar province of the courts. The Court also drew from the landmark decision in Marbury v. Madison, 5 U.S. 137, 177 (1803), where Chief Justice John Marshall famously stated that “[i]t is emphatically the province and duty of the judicial department to say what the law is.”
The Court in Loper concluded that the Administrative Procedure Act requires courts to exercise their own independent judgment in determining whether an agency has acted within its statutory authority. The Court recognized that exercising independent judgment often includes giving due respect to executive branch interpretations of federal statutes. After all, they are the subject-matter experts and often had a role in drafting the law in question. Nevertheless, while the views of an agency may assist in informing the courts, the judiciary may not defer to an agency’s interpretation of the law simply because a statute is ambiguous.
On June 28, 2024, the Court released its opinion in the consolidated cases Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce, overruling the longstanding Chevron Doctrine.
A Realignment of Powers
Administrative agencies are a somewhat late addition to our relatively young country. Their authority and purpose are still evolving. There is no doubt they serve an essential role, regulating industry, protecting public health and welfare, and managing important economic and social issues. However, as their influence expands, so do allegations of government overreach.
Agencies are often in an unenviable position, though. They are charged with carrying out the will of Congress when legislative direction is often ambiguous or sometimes wholly absent. The 1984 Chevron Doctrine gave deference to the agencies on such matters. After Loper, the responsibility for resolving such ambiguities falls solely upon the judiciary.
