The end of deference to agency statutory interpretations will result in regulatory inconsistency.
Consistency is essential to effective regulation. Regulated parties depend on predictability in designing compliance programs and making business decisions, and other stakeholders order their affairs based on expected regulatory behavior. Consistency, however, has multiple dimensions and can be impaired in various ways. Change over time—temporal inconsistency—disturbs reliance interests by making planning difficult. Contemporaneous inconsistency—inconsistency across courts or jurisdictions at a single moment—also disturbs reliance interests by making it difficult for regulated parties to identify and satisfy their compliance obligations. The entitlements and rights of beneficiaries of regulatory regimes may also vary across jurisdictions.
In Loper Bright Enterprises v. Raimondo, the U.S. Supreme Court rejected the rule that courts must defer to reasonable agency interpretations of ambiguous statutes that was announced 40 years earlier in Chevron v. Natural Resources Defense Council. In overruling Chevron, the Court noted that agency interpretations can change with political winds, introducing the risk of temporal inconsistency and undermining reliance interests. But the Court paid little mind to the risk of contemporaneous inconsistency in the absence of authoritative agency interpretations. Ultimately, that risk may prove to be more significant than the “problem” that Loper Bright purported to solve.
For the 40 years during which Chevron deference was the law of the land, federal courts were required to defer to reasonable agency interpretations of ambiguous statutory language. In those four decades, Chevron became one of the most-cited Supreme Court cases in history. In Loper Bright, the Supreme Court wrote Chevron’s obituary. According to the Loper Bright majority, Chevron deference was based on an erroneous interpretation of the Administrative Procedure Act (APA). Under the APA, courts—not agencies—must “decide all relevant questions of law and interpret constitutional and statutory provisions.”
In rejecting a long-settled interpretation of the APA, the Court considered whether stare decisis weighed in favor of retaining Chevron deference. The Court found that it did not, focusing on temporal consistency. Under Chevron, agency positions on ambiguous statutory language were susceptible to flip-flopping with changes in presidential administration. Statutory ambiguity acted as “a license authorizing an agency to change positions as much as it likes.” As a result, the Court noted, Chevron fostered “unwarranted instability in the law, leaving those attempting to plan around agency action in an eternal fog of uncertainty.” In a concurrence, Justice Neil Gorsuch similarly wrote that “because the reasonable bureaucrat may change his mind year-to-year and election-to-election, the people can never know with certainty what new ‘interpretations’ might be used against them.”
Loper Bright may indeed reduce the risk of temporal inconsistency, but it amplifies the risk of contemporaneous inconsistency, which could be more disruptive and more damaging to settled expectations and predictability. Under Chevron, an agency’s interpretation of ambiguous statutory language generally served as an authoritative interpretive source for all federal courts. That interpretation could change over time, including with changes in presidential administration. But at any given moment, regulated parties and other stakeholders could know with a reasonable degree of certainty how a court would interpret and apply an ambiguous statutory provision if the regulator had spoken to the issue. Reasonable agency interpretations thus functioned as nationwide law, and regulated actors could generally rely on agency interpretations in designing and operating their compliance programs.
Now, each court faced with an interpretive question will decide for itself, without any deference to single agency interpretation, what a statute means. Although one district court might reach one conclusion, a second court might reach a different one, and a third might reach still another. Should the decisions of those courts be appealed, multiple courts of appeals may weigh in as well, each also applying its own judgment as to the “best” interpretation of statutory language, and, as a result, potentially reaching different outcomes.
Only those few cases that reach, and are decided by, the Supreme Court will result in authoritative interpretations that may be relied upon nationwide as settled law. Given that the Supreme Court hears only around 80 cases each year, the vast bulk of regulatory interpretation will take place in lower courts now untethered to the moorings that Chevron deference provided. Prior to Loper Bright, Chevron had been cited in 17,000 lower court decisions. Even though Chevron had been on precarious footing at the Supreme Court for some time, lower courts consistently applied and relied on it. And it made a difference; in 2017, Kent Barnett and Christopher J. Walker found that federal courts of appeals applying Chevron deference were significantly more likely to endorse agency interpretations than courts applying other standards of deference. Agency interpretations were lodestars that fostered contemporaneous consistency.
Regulated actors can no longer be confident that reasonable agency interpretations will carry the day in every court. Their uncertainty may have significant impacts on their compliance programs and business operations. In the absence of Chevron deference, it becomes more likely that statutory language will be interpreted differently by different courts.
This contemporaneous inconsistency is at least as pernicious as temporal inconsistency. Parties acting within regulated spheres could face conflicting interpretations, and thus conflicting obligations or restrictions, in different locations. Through appellate processes, these conflicts may be narrowed as each circuit of the courts of appeals adopts a preferred interpretation. But in the absence of a Supreme Court resolution of an issue, a given regulatory regime may become fragmented by varying interpretations. Regulated parties engaging in activities that cross jurisdictional boundaries will be forced to reckon with these conflicting interpretations. They might adopt costly and complex compliance programs that vary geographically. Or they could adopt compliance programs that meet all standards announced by all courts—which could be significantly more burdensome than whatever compliance program the relevant federal regulator would consider to be required under its interpretation of the relevant statute. Similarly, parties who benefit from regulatory regimes may find that their rights and entitlements vary depending on where they reside. And regulators themselves may encounter challenges in carrying out nationwide enforcement programs in light of inconsistent standards.
Although it is too soon to identify specific conflicts that will arise across jurisdictions in the post-Chevron environment, a sample of ongoing litigation in lower courts suggests some possibilities. Post-Loper Bright decisions have already been issued in cases involving the authority of the U.S. Department of the Treasury to regulate complex cryptocurrency instruments, the U.S. Department of Labor’s definition of a “tipped employee” for purposes of the Fair Labor Standards Act, and the Federal Communications Commission’s net neutrality regulations, among many others. In the eight months since Loper Bright was decided, it has been cited in more than 300 court decisions.
The risk of contemporaneous inconsistency engendered by Loper Bright will be exacerbated by forum shopping. Parties who would benefit from a restrictive interpretation of a statutory ambiguity are likely to file their cases in jurisdictions more likely to be receptive to their arguments. Parties seeking different outcomes will seek to litigate in friendlier confines. Multiple cases in multiple courts are more likely to lead to multiple outcomes. Even though forum shopping is nothing new, the chances of inconsistent outcomes in multiple fora will increase since courts are now unbound by the deference that Chevron required.
There is no doubt that consistency and predictability are features of effective regulatory regimes. But in promoting one flavor of consistency, Loper Bright sacrifices another. Rather than settling the expectations of stakeholders, Loper Bright is likely to unsettle them further and drive greater uncertainty, cost, and burden across regulatory regimes
