31 Jul 2024

Navigating the Regulatory Fallout from SCOTUS Reversal of the Chevron Doctrine

By Kemahl Franklyn

In what may be one of the most consequential decisions in the history of administrative law, the U.S. Supreme Court decided two cases in their most recent term that determine the constitutionality of what had been a longstanding interpretation of federal agencies’ ability to interpret law and issue regulatory guidance.

On June 28th the Court decided Loper Bright Enters. V. Raimondo and Relentless v. Department of Commerce, a pair of cases brought by two fishing vessel operators challenging federal regulations on fishery management in federal waters. In a 6-3 ruling, a majority of justices held that the high court’s test established in 1984’s Chevron v. Natural Resources Defense Council decision improperly prioritized the executive branch’s legal interpretations over the judicial branch’s interpretations. This decision overruled the Chevron doctrine that for four decades has required federal courts to defer to administrative agencies’ interpretations of ambiguous or broad statutes.

The dramatic reversal of Chevron introduces significant uncertainty about how lower courts will weigh competing legal arguments in the large arena of administrative rule making and related litigation. It effectively deprives courts of a commonly used analytic tool and leaves a number of questions about what comes next in a wide range of practice areas, from commercial transactions and capital markets to corporate governance and healthcare law.

“Since the high court in Loper Bright eliminated the longstanding doctrine that directed courts to defer to federal agencies’ interpretations of ambiguous statutory language, several judges have issued preliminary injunctions against agency rule making, and judges across the country are now entertaining supplemental briefing on Loper Bright’s possible effect on a range of cases challenging federal regulations,” reported Law360.

One specific area of regulation that is certain to be impacted by the Chevron reversal is workplace law.

“Although the underlying cases of Loper Bright were not workplace-related, the decision may significantly affect employers because of the many regulations issued by federal agencies, such as the Equal Employment Opportunity Commission (EEOC), Department of Labor (DOL), Occupational Safety and Health Administration (OSHA) and National Labor Relations Board (NLRB), that affect the workplace every day,” writes Lexis Practical Guidance contributors Stephanie Adler-Paindris and Patricia Anderson Pryor of Jackson Lewis P.C., in a recently published practice note.

The authors note that the Loper Bright decision does not have any immediate impact on workplace law, so employers should continue to follow all agency regulations and guidance, but the reversal of Chevron will make it easier to challenge regulations in the future. They identify five specific areas of workplace law in which the decision is likely to affect pending legal challenges:

  1. EEOC regulations implementing the Pregnant Workers Fairness Act, which requires that employers with at least 15 employees provide reasonable accommodations (absent undue hardship) to qualified employees and applicants with known limitations related to pregnancy, childbirth of related medical conditions.
  2. DOL rules increasing the minimum salary threshold for application of the Fair Labor Standards Act’s (FLSA) “white collar” exemptions, “independent contractor vs. statutory employee” definitions under the FLSA, and implementing an executive order boosting the minimum wage for federal contractors.
  3. OSHA’s new “walkaround” rule that allows union organizers to accompany OSHA inspectors on workplace inspections.
  4. NLRB’s joint-employer rule, vacated earlier this year by a District Court in Texas, which only requires an entity to possess or reserve the right to control an employee’s essential terms and conditions of employment.
  5. The Federal Trade Commission’s rule barring non-compete agreements for all employees at all levels, with only extremely limited exceptions.

“Of course, just because a court has more discretion to accept or reject an agency’s interpretation does not mean the interpretation will be rejected,” write the authors. “However, with greater judicial discretion, a rule may be upheld in one court and invalidated in another. This could lead to a spate of inconsistent rulings throughout the country, creating jurisdictional conflicts and compliance headaches for large employers in multiple states.”

The insightful practice note from Ms. Adler-Paindris and Ms. Pryor is one of the many resources that LexisNexis has assembled to help legal professionals navigate the regulatory fallout from the Supreme Court’s reversal of the Chevron doctrine.

The Lexis Practical Guidance team has just released the Chevron Reversal Impacts Resource Kit, a comprehensive collection of information resources that provide practical insights on the Loper Bright decision’s impact across key practice areas. Specific areas of practice covered by the resource kit include:

  • Capital Markets
  • Commercial Transactions
  • Construction
  • Corporate Governance
  • Employee Benefits and Executive Compensation
  • Energy and Utilities
  • Federal Government
  • Financial Services Regulation
  • Healthcare
  • Labor & Employment
  • Life Sciences
  • Real Estate
  • Tax

Lexis Practical Guidance provides access to a wide range of resources — from templates and checklists to practice notes and authoritative analysis — that help lawyers develop the critical knowledge needed to accomplish the most complex tasks, including those outside of their primary areas of expertise. Click here for a free trial of Lexis Practical Guidance.