Trump’s Agencies After Chevron

This past summer, in Loper Bright v. Raimondo, the Supreme Court overruled its 1984 decision in Chevron v. NRDC. Under Chevron, perhaps the most well-known case about administrative law, courts were required to defer to administrative agencies’ interpretations of federal statutes. Now that Chevron is overruled, courts must independently interpret statutes themselves, rather than systematically favor the statutory interpretations proposed by agencies. That means that, in many instances, agencies will now be subject to closer scrutiny by courts.

Readers hoping for administrative agencies to seek policy changes during President-elect Donald Trump’s second term might therefore wonder: Will the end of Chevron severely undermine agencies’ abilities to change regulatory policy consistent with Trump’s vision? The answer, at least when Loper Bright is properly understood, is no. That’s because of a distinction between questions of law and questions of policy. Although Loper Bright curtails agencies’ authority when it comes to the law, agencies remain free to change regulatory policy in accordance with the president’s objectives. That means Trump’s agencies will have wide latitude to change regulatory policy in Washington.

The rules governing how courts review the decisions of federal agencies are complex. To simplify matters some, administrative agencies can make three different types of decisions: (1) findings of fact, (2) conclusions of law, and (3) policy decisions. Each type of decision can be challenged in a lawsuit. And when courts decide those various lawsuits, they review the lawfulness of agency action through different lenses requiring different standards of review. The appropriate standard of review depends on which of those three decisions a lawsuit concerns.  

The Chevron framework only applied to a subset of cases falling within the second bucket (agency conclusions of law). In particular, Chevron required courts to defer to agencies’ legal conclusions concerning statutory meaning. As I have explained elsewhere, the Chevron regime therefore “placed courts—who are supposed to offer a neutral venue for deciding legal disputes between opposing litigants—in a rather awkward spot,” because “Chevron required courts to systematically favor… one type of litigant (i.e., agencies) over other types of litigants (e.g., entities governed by agencies), even when the court thought that the non-agency litigant had the better of an argument.” Because Loper Bright freed courts to decide cases based on the strength of litigating parties’ competing interpretations—rather than require courts to settle for a less-than-best interpretations offered by a government agency—Loper Bright is an encouraging development.

But although Loper Bright‘s overruling of Chevron was momentous, the case is not as far-reaching as one might expect. That’s because Loper Bright did not directly change how courts review lawsuits concerning another major category of agency decisions: policy decisions. To the contrary, courts typically review challenges to agency policy decisions through an entirely separate framework from Chevron, called State Farm review. Speaking in general terms, State Farm review requires courts to uphold an agency’s policy decision (even if the court disagrees with it) so long as the decision is not “arbitrary” or “capricious.” The State Farm framework therefore gives agencies plenty of room to maneuver—particularly when contrasted against the new standard announced in Loper Bright.

Nothing in Loper Bright limits agencies’ abilities to exercise policy discretion. Instead, and as the Court made clear in Loper Bright itself, “the best reading of a statute” will often indicate that it “delegates discretionary authority to an agency.” Justice Kavanaugh highlighted this very point in public remarks he gave at The Catholic University of America’s law school following Loper Bright. As he put it, one should not “overread Loper Bright,” because “oftentimes Congress will grant a broad authorization to an executive agency.” Justice Kavanaugh therefore thought it “really important” for courts, as “neutral umpire[s],” to “not…unduly hinder the executive branch from performing its congressionally authorized functions.” The upshot is that agencies won’t see their ability to set and change policy as being as restricted by Loper Bright as one might fear.

To understand what this looks like in practice, consider Auer v. Robbins—a seminal administrative law case involving the Department of Labor. That case, which focuses on exemptions from overtime pay requirements in the Fair Labor Standards Act (FLSA), is typically referenced for a distinct form of deference courts give to agencies’ interpretations of their own regulations. But the case also offers insight into how agencies’ interpretations of statutes were treated under the old Chevron regime.  

Citing Chevron, Justice Scalia’s majority opinion stated that the Court “must sustain” the Secretary of Labor’s interpretation of the FLSA “so long as it is ‘based on a permissible construction of the statute.’” That meant the Court would uphold the secretary’s legal interpretation even if the Court didn’t think the secretary’s legal reasoning was the best interpretation. It would suffice for the secretary to offer only a permissible interpretation—a far lower bar. After Loper Bright, a court would be free to adopt a more persuasive interpretation, rather than defer to the head of an agency. 

Loper Bright therefore brings about a big change. But what about those instances, flagged in Loper Bright itself, when “the best reading of a statute” indicates that the statute “delegates discretionary authority to an agency.” Plenty of those exist in the labor and employment context. And in those instances, Loper Bright shouldn’t move the needle much.

Take worker-safety laws. The Secretary of Labor is empowered to set and amend occupational safety and health standards, which can require an employer to adopt “practices, means, methods, operations, or processes, reasonably necessary or appropriate to provide safe or healthful employment.” That statutory language gives the secretary significant policy discretion to regulate private actors. What is the acceptable workplace exposure limit for a harmful substance—say, Acetaldehyde, to pick a chemical at random? Is it 195 parts per million, 207, or 500? That decision is left to the secretary’s discretion. 

The acceptable range is narrowed some, as a matter of law; the secretary’s determination must be “reasonably necessary or appropriate,” which forecloses some possibilities. But the best reading of the phrase “reasonably necessary or appropriate” suggests a wide range of legally permissible options (for those interested, the current limit is 200 parts per million). Deciding questions like this inherently requires an exercise of policy discretion that, even after Loper Bright, courts should not often upset. 

In short, Loper Bright ushered in a welcome change to administrative law. That change requires courts to perform the hard work of independently identifying a statute’s best legal reading, rather than settle for a less-than-best one proposed by an agency. But oftentimes that best legal reading will indicate that an agency has been statutorily afforded broad policy discretion. Courts (both before and after Loper Bright) should therefore respect the distinction between law and policy, and avoid intruding upon the policy discretion afforded to administrative agencies tasked with carrying out the president’s policy objectives.