The court could overturn or narrow a long-time standard for agencies to interpret statutes when enforcing rules, which might impact future regulatory programs.
01/03/2024 2:50 P.M.
3.5 minute read
The U.S. Supreme Court will hear oral arguments in two cases on Jan. 17 that could overturn a decision centered on federal agency use of statutes.
As a result of the decision in Chevron, U.S.A., Inc. v. NRDC (1984), a court defers to agency interpretations of ambiguous statutes if the judge finds the interpretation to be reasonable—otherwise known as the Chevron doctrine.
If the Supreme Court limits or upends the Chevron doctrine, the ruling would pull back the leeway that agencies have had in interpreting statutes.
One of the cases before the Supreme Court, Loper Bright Enterprises., Inc. v. Raimondo, could result in the court overruling Chevron entirely or narrowing it significantly, ACA International previously reported.
The second related case before the court is Relentless, Inc., v. Department of Commerce.
“Chevron has been in place for almost 40 years and has been a linchpin of administrative law—governing how agencies promulgate rules and how courts review agency actions,” according to an article from Brownstein Hyatt Farber Schreck LLP, including partner Leah Dempsey, who is ACA International’s lobbyist. “Repudiating such a landmark precedent would encourage more challenges to agency interpretations of statutes even in situations where courts have previously upheld agency positions.”
The Loper case involves an appeal of a D.C. circuit court decision that upheld, under the Chevron doctrine, a National Marine Fisheries Service regulation mandating herring fishing boats to allow a federal observer to oversee their work on board and for the fishing company to compensate the observer for their time, according to the Brownstein article.
Of importance to the accounts receivable management industry is that in agreeing to consider the Loper case, the court could overturn the Chevron doctrine, or narrow its scope.
“Under Chevron, a court defers to agency interpretations of ambiguous statutes, as long as the judge finds the interpretation to be reasonable. If the court limits or upends the Chevron doctrine, the ruling would pull back the leeway that agencies have had in interpreting statutes,” according to the article from Brownstein.
The standard has been in place since 1984, when the Supreme Court upheld the Environmental Protection Agency’s interpretation of the Clean Air Act in Chevron, U.S.A., Inc. v. NRDC.
Under the Chevron doctrine, courts are instructed to conduct a two-part analysis, according to Brownstein:
- “First, a court must determine whether Congress has directly spoken to the precise question at issue. Chevron deference is only at play if Congress has granted the agency authority to act, and there is ambiguity in the relevant statute.
- Second, if the court finds ambiguity in the applicable statute, the agency interpretation receives deference as long as the actions are based on a ‘permissible construction’ of the statute.”
Chevron Analysis in ARM Industry Cases
The Chevron analysis has been used in an Equal Credit Opportunity Act (ECOA) case as well as a model validation notice (MVN) case in the last year.
According to an ACA SearchPoint document on the ECOA (PDF), the full scale Chevron analysis is “used to determine the extent to which a court reviewing agency action should give deference to the agency’s construction of a statute that the agency had been authorized to administer.”
In the ECOA case, a district court dismissed an enforcement action from the Consumer Financial Protection Bureau stating the defendants violated the act, ACA previously reported.
In July 2020, the CFPB filed a lawsuit against Townstone Financial Inc. in the U.S. District Court for the Northern District of Illinois for alleged violations of the ECOA, according to the CFPB website for the case.
This case is worth following for any entity subject to federal regulation, according to Brownstein. The extent to which the court uses this case to eliminate or narrow the Chevron deference will undoubtedly affect future challenges to agency statutory interpretation and the development and implementation of future regulatory programs.
ACA will provide an update on the case following the Jan. 17 oral arguments in ACA Daily and on the ACA Huddle.
Related Content from ACA International:
Case on Federal Agencies’ Interpretation of Statutes on the Supreme Court’s Docket
U.S. Supreme Court to Review Administrative Law Case
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