Top Left to right: Instructional Professor Tracy Hester, Dean Leonard M. Baynes, and Professor Darren Bush
2nd Row (L to R) Professor Gina Warren and Associate Professor Andrew Michaels
Sept. 20, 2024 – With the recent Supreme Court decision allowing federal judges to interpret vague language previously left to the agencies tasked with oversight of statutes to interpret, the impact on the close to four-decade-old Chevron Doctrine of Deference has begun to be felt within the legal system.
The case that ultimately led to the demise of the Chevron Doctrine, Loper Bright Enterprises v. Raimondo, was part of the discussion of a CLE event presented by the University of Houston Law Center. The event was moderated by Dean Leonard M. Baynes with UHLC professors Andrew C. Michaels, Darren Bush, Gina S. Warren, and Tracy Hester serving as a panel of experts.
The Chevron doctrine was a landmark ruling from 1984. The ruling had required courts to defer to federal agencies’ interpretations of laws in certain circumstances, provided the interpretation was reasonable. The Loper Bright decision fundamentally shifted this power to the courts, which now have the primary role in interpreting ambiguous statutes rather than the agencies.
Professor Michaels opened with an overview of the Loper Bright case and examined how it overturned the Chevron Doctrine. The facts of this case involved the Magnuson-Stevens Fishery Conservation and Management Act, which authorized the National Marine Fisheries Service to approve and disseminate regional fishery management plans. One such plan was challenged by petitioners as unauthorized by the statute. The circuit courts deferred to the agency based on perceived statutory ambiguities, applying the Chevron doctrine. However, at the Supreme Court, Chevron was overruled based on inconsistency with the Administrative Procedure Act (1946). Taking a somewhat formalist approach, the Loper Bright decision instructs that questions of statutory interpretation have a single best answer which is dictated by law and not policy, and that courts should no longer defer to agency interpretations that are merely reasonable, explaining: “In the business of statutory interpretation, if it is not the best, it is not permissible.”
The initial impact of the loss of Chevron was the focus of Professor Darren Bush’s presentation. He maintains the court’s decision may not have been thoroughly considered in terms of short- and long-term implications.
“The text of the APA says lots of things. It says you shall vacate decisions that are arbitrary and capricious. Loper Bright says the text of the APA means what it says. Does that mean the courts are no longer going to reverse and remand, they’re going to vacate and remand?” Bush examined.
Bush pointed out that, in many cases, Chevron was already long considered dead, pointing out the last time Chevron was included in a SCOTUS case was in 2016. Previous brushes with Chevron were heard in 2000 and 1994.
Because of still unrealized impacts on interpretations in the future, Bush believes Chevron could be reintroduced in some form, if only because of more challenges to interpretations or inconsistencies in rulings and results.
Another case, which SCOTUS heard within the same time frame as Loper Bright was Securities and Exchange Commission v. Jarkesy, also played a role in the end of Chevron. Professor Gina Warren said the 7th Amendment right to trial comes into play when the SEC “seeks to impose punitive fines for securities fraud.” George Jarkesy started two hedge funds and raised between $24 and $30 million from 100 investors. Allegations of fraud in Jarkesy were lodged before an administrative law judge. Allegations included fraudulent misrepresentation of investment strategies, false reporting of auditor and prime broker identities, and inflating the funds’ value. Jarkesy was ultimately fined $300,000, although after appeals, SCOTUS granted cert affirming the 5th Circuit’s decision to vacate. The Court held that the SEC’s right to bring an action before its administrative law judge was overridden by the defendant’s 7th Amendment right to a jury trial.
Professor Tracy Hester stated that Jarkesy raised the deepest questions regarding “constitutional barriers to congressional ability to allocate power to agencies, particularly with enforcement actions that involve penalty actions, which is a core administrative power.” Even if Congress clearly wanted to give an agency the authority to use administrative orders to enforce rules, it couldn’t bestow powers that would violate constitutional rights to a jury trial under the 7th Amendment.
“It’s a two-part test. One, does it involve a legal claim? This question is measured by a host of different factors. The second part, is it a public right? Such public rights are excepted from the Seventh Amendment jury trial right.
“We’re also looking at a host of other administrative tools that the court is going to be immediately tasked with trying to sort out. To give just a short list, restitution orders, (which are not punitive or deterrent but simply restore the status quo) and disgorgement of illegally gained profits (again, restoring the status quo) might not qualify as “legal” remedies that would qualify for a jury trial.
“Obviously, much confusion ahead.”
Dean Baynes noted the discussion was part 2 of UH Law Center’s continuing commitment to Continuing Legal Education focusing on pivotal Supreme Court decisions in the 2023-2024 term with the goal to provide meaningful insights to recent decisions that impact society.
“The CLEs are a part of a broader effort to engage the community in legal issues and to provide understanding of these landmark cases,” Dean Baynes said.
The third and final SCOTUS CLE in this year’s series will be held on October 9 on the topic of Post-Dobbs Legal and Medical Ramifications.
