Today the United States Supreme Court struck down a forty-year-old precedent that required courts to give deference to statutory interpretations of administrative agencies. This is welcome news to RMAI members who have been subject to onerous regulations from the Consumer Financial Protection Bureau (CFPB), Federal Trade Commission (FTC), and other federal agencies in recent years. The Chevron doctrine (so named for the case in which it was created: Chevron U.S.A. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984)) utilized a two-step framework to interpret statutes administered by federal agencies. The first step was to determine whether Congress has directly spoken on the precise question in issue. If yes, and if congressional intent is clear, the inquiry is over. If not, step two requires the court to defer to the federal administrative agency’s interpretation of the statute if it “is based on a permissible construction of the statute.”
In Loper Bright Enterprises, et al v. Raimondo, et al., writing for the 6-3 majority, Chief Justice Roberts explained the separation of powers inherent in the Constitution. The Chief Justice then noted that while the views of the Executive branch (within which administrative agencies may be found) are entitled to “respect” and can “inform the judgment of the Judiciary,” they do not supersede a court’s judgment.
The opinion explained that the rapid growth of administrative agencies since the New Deal in the 1930s led to the passage of the Administrative Procedures Act (the “APA”), which was enacted “as a check upon administrators whose zeal might otherwise have carried them to excesses not contemplated in legislation creating their agencies.” Essentially codifying the principles from Marbury v. Madison, an early Supreme Court decision that established that the courts decide legal questions, the APA specified that “courts, not agencies, will decide ‘all relevant questions of law’ arising on review of agency action.”
Chief Justice Roberts observed that Chevron was a departure from this traditional approach. Since then, Chevron deference has grown, emboldening administrative agencies and the power of the Executive Branch while ignoring the Administrative Procedures Act’s and the U.S. Constitution’s mandate that the courts interpret the laws. The Chief Justice also opined that “Chevron’s presumption is misguided because agencies have no special competence in resolving statutory ambiguities. Courts do.” He then noted that the Supreme Court had not deferred to an agency interpretation under Chevron since 2016 but that lower courts continue to apply it.
Striking down Chevron means that federal courts must no longer defer to administrative agencies when interpreting a statute, although the administrative agencies and their interpretations remain persuasive authority that a court may consider in ultimately rendering a decision. In addition, regulations from these administrative agencies are subject to attacks to the extent that they exceed the authority given to them by Congress. Coming on the heels of the decision that upheld the CFPB’s funding as constitutional, the Loper decision could offer RMAI members a better avenue to defend themselves against overreach from the CFPB, the FTC, and other federal agencies.
This Member Alert is intended for members of the Receivables Management Association International, is for informational purposes only, and is in no way intended to provide legal advice. Members are encouraged to consult with an attorney of their choice for legal advice concerning this matter.