FEDERAL GOVERNMENT RELATIONS
Supreme Court Overturns Legal Test for Deferring to Agency Interpretations
In a 6-3 decision on Friday, the U.S. Supreme Court overturned the longstanding “Chevron deference,” which instructs courts to defer to a federal agency’s reasonable interpretation of an ambiguous statute. The majority ruled that courts must instead rely on their independent judgment when deciding whether an agency has acted within its statutory authority.
The 1984 Supreme Court decision Chevron v. Natural Resources Defense Council established a legal test for when courts should consider deferring to federal agencies. However, in their decision for Loper Bright Enterprises v. Raimondo, the majority of justices struck down that test, saying it violated the Administrative Procedure Act. Chevron “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,” said Chief Justice John Roberts, writing for the majority.
Chevron has been cited in numerous legal cases involving questions of agencies’ statutory authority. The majority ruled that those previous cases still stand. “The holdings of those cases that specific agency actions are lawful…are still subject to statutory stare decisis despite the court’s change in interpretive methodology,” Roberts wrote.
Supreme Court Decision Extends Period for Administrative Law Challenges
The six-year period allowed for lawsuits against the U.S. government under the Administrative Procedure Act begins accruing when an injury begins, not when a regulatory action is finalized, the Supreme Court ruled Tuesday. In a 6-3 decision issued on the final day of the court’s 2023-24 term, the court resolved a split among different circuit courts in how the statute of limitations is triggered.
The decision allows Corner Post, a North Dakota convenience store, to move forward with its challenge to the debit interchange fee caps set in 2011 under the Federal Reserve’s Regulation II. Corner Post opened in 2018 and filed suit in 2021 asserting that Reg II as unlawful under the APA. In her majority opinion, Justice Amy Coney Barrett cited case law that “a right accrues when it comes into existence” and a legal dictionary definition that “a cause of action accrues ‘on [the] date that damage is sustained and not [the] date when causes are set in motion which ultimately produce injury.’”
In a dissent, Justice Ketanji Brown Jackson remarked that Corner Post, combined with the Loper Bright Enterprises decision last week overruling “Chevron deference,” would “invite and enable a wave of regulatory challenges – decisions that carry with them the possibility that well-established agency rules will be upended in ways that were previously unimaginable…Now, every legal claim conceived of in those last four decades – and before – can possibly be brought before courts newly unleashed from the constraints of any such deference.”
The ruling did not reach a decision on the merits of Corner Post’s lawsuit, which is now expected to return to the trial court for further proceedings. In 2014, the D.C. Circuit Court of Appeals rejected retailers’ arguments that Reg II’s fee caps were too high, and in 2015 the Supreme Court declined to hear an appeal of the circuit court’s decision.