Posted on July 5, 2016 by Jeff Civins
Administrative lawyers, especially environmental lawyers, are well familiar with the doctrine of Chevron deference as applied to agency interpretations of statutes. In the 1984 Clean Air Act case of Chevron U.S.A. Inc. v. Natural Resources Defense Council, the U.S. Supreme Court announced a 2-step approach: (1) the court must determine whether Congress has directly spoken to the precise question at issue and, if so, that ends the matter—the Court, as well the agency, must give effect to that intent; and (2) if not, the court must defer to the agency’s interpretation if it is “reasonable,” the presumption being that Congress intended to leave its resolution to the agency. In a more recent Clean Air Act case, Michigan v. EPA, the Court, although determining EPA acted unreasonably in failing to consider costs in its regulation of hazardous air pollutants from power plants, applied the Chevron doctrine, but Justice Thomas, in his concurring opinion, challenged the doctrine’s legal underpinnings, causing some to question the continued vitality of the doctrine. In Encino Motorcars v, Navarro, decided on June 20, 2016, the Supreme Court, although deciding that the agency’s interpretation was not entitled to deference, provided assurance that the Chevron doctrine is alive and well.
The case involved the issue of whether service advisors at car dealerships were exempt from overtime pay under the Fair Labor Standards Act. In 2008, the Department of Labor had proposed a rule confirming a long-standing practice that they were exempt, but in its final rulemaking–in 2011–it reversed course, without explanation. The Court of Appeals for the Ninth Circuit had applied Chevron deference in upholding the rule, but the Supreme Court reversed. It held that, although the Department could change its policy, its interpretation was not entitled to Chevron deference because it did not provide a reasoned explanation for doing so. The Court therefore remanded to the Ninth Circuit to determine the rule’s validity in the first instance. In her concurring opinion, Justice Ginsburg, joined by Justice Sotomayor, noted: “’[U]nexplained inconsistency’ in agency policy is ‘a reason for holding an interpretation to be an arbitrary and capricious change from agency practice.’” In his dissent, Justice Thomas, joined by Justice Alito, agreed with the majority–that the Court “need not wade into the murky waters of Chevron deference,” but disagreed that the Court should have reversed and argued that the rule change was simply invalid.
So, Chevron deference lives, but it does not apply to unexplained rule changes.