By: Benjamin J. Wilson and Michael T. Cimino
On June 28, 2024, the Supreme Court of the United States overruled Chevron v. Natural Resources Defense Council and with it the so-called “Chevron deference.” We detailed the holding of Loper Bright Enterprises v. Raimondo in an article here. Today, we are going to discuss what the Loper decision means for operators moving forward.
Briefly, Chevron deference required courts to defer to an administrative agency’s interpretation of an ambiguous statute or regulation. The actual review took place in two steps. First, the court would determine whether Congress had spoken directly to the precise statutory question at issue. If the court determined that Congress had directly addressed the issue, then the analysis ended there. But if the court determined that Congress had not spoken to the issue, then Chevron directed the court to defer to the agency’s reading of the provision, so long as it was “permissible.”
How did Chevron look in practice? In In re Kaiser Aluminum & Chemical Company, 214 F.3d 586 (2000), the Fifth Circuit Court of Appeals addressed the question of whether the Mine Safety and Health Administration (“MSHA”) could assert jurisdiction over a bauxite processing plant following an explosion at the plant. The operator argued that it should be regulated by the Occupational Safety and Health Administration (“OSHA”) instead of MSHA because it was not a “coal or other mine” as defined by the Mine Safety Act. MSHA argued that the plant was under its jurisdiction because it engaged in “milling,” a term used—but not defined—in the definition of a “coal or other mine.” The Fifth Circuit first noted that Congress expressly delegated authority to the Secretary of Labor to determine what constitutes “milling,” noting that deference was “especially appropriate” in this “highly technical area.” The operator did no crushing at the plant, instead utilizing a chemical process involving liquid stages, which MSHA argued constituted “milling.” Accordingly, and despite the court noting that this process “does not sound much like milling,” the court found that MSHA’s statutory interpretation of “milling” was not unreasonable, such that the bauxite processing plant was subject to MSHA’s jurisdiction.
Now that Chevron has been overruled, what does Loper mean for operators moving forward? Critically, the Supreme Court did not establish a set standard for reviewing alleged ambiguities, instead instructing lower courts to exercise their “independent judgment.” Of course, “step zero” is determining whether an ambiguity exists at all. The Court also left open the door to Chevron’s predecessor: Skidmore deference. Skidmore v. Swift & Co., 323 U.S. 134, is a Supreme Court decision dating back to 1944, and at its simplest states that courts may consider an agency’s interpretation based on how persuasive it is. This includes considering “the thoroughness evident in [the agency’s] consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.” Skidmore, 323 U.S. at 140. If this analysis had been applied in Kaiser Aluminum instead of Chevron, it seems possible that the Fifth Circuit would have found MSHA’s argument lacking, especially when the chemical process did “not sound much like milling.”
Also noteworthy is the fact that the Supreme Court stated that the Loper decision does not “call into question prior cases that relied on the Chevron framework. The holdings of those cases that specific agency actions are lawful—including the Clean Air Act holding of Chevron itself—are still subject to statutory stare decisis despite our change in interpretive methodology.” In other words, previous decisions that relied on Chevron are still good law—for now. The Court noted that those decisions may still be challenged, if a party can show “special justification” for the overturning of those decisions. The Court did not explain what additional justifications may be enough to overturn those prior interpretations.
The toppling of Chevron is likely to trigger a tsunami of litigation, as many businesses and operators are going to feel more comfortable challenging rules and regulations that, pre-Loper, faced long odds. In fact, Loper likely opened the door for operators to assert additional arguments in challenging regulations, including the major questions doctrine and non-delegation doctrine. The major questions doctrine prevents agencies from regulating areas with “vast economic and political significance,” unless Congress itself has clearly delegated power to the agency. See West Virginia v. EPA, 597 U.S. 697 (2022). The non-delegation doctrine similarly enforces the constitutional separation of powers by imposing limits on what lawmaking powers Congress (the legislative branch) may delegate to administrative agencies (the executive branch).
Moreover, agencies themselves will be bracing for an increase in legal battles. Agencies—especially those like OSHA and MSHA—also will be less likely to be as creative in their arguments to stretch certain regulations to cover certain conduct. Undoubtedly, the increased litigation—and unwillingness of the agencies to test new legal theories—will affect the dynamics of settlement negotiations as well.
Another factor operators—and especially those with operations across multiple states—will need to be aware of is the existence of differing interpretations of regulations across jurisdictions. For example, the Ninth Circuit Court of Appeals (encompassing Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington) could likely interpret a rule differently than the Fifth Circuit Court of Appeals (including Louisiana, Mississippi, and Texas). Relatedly, this could also result in forum shopping, wherein litigants file suits in districts where they may be more likely to find a favorable court. Accordingly, regulatory uncertainty and instability may be a feature moving forward, as lower courts grapple with different approaches and analyses until consistent approaches are recognized.
All told, the fall of Chevron will have major implications for operators moving forward. Please contact a member of the Jackson Kelly Workplace Safety and Health Team if you have any questions regarding these or other developments.