Chevron Deference Is Dead. Is the Administrative State Still Alive?

In this episode, we delve into the consequences of the Supreme Court’s decision to overturn the Chevron doctrine, and look at how the Loper Bright decision is impacting regulations in the US.

In just the first six months after Loper Bright was decided, courts cited the case more than 400 times, according to a Minnesota Law Review article. Lower federal courts invalidated new agency rules almost 84% of the time. This has affected policies ranging from net neutrality to labor regulations to environmental protections. We delve into how Loper Bright has already reshaped American regulatory policy.

We also look into how the Trump administration is attempting to leverage Loper Bright to dismantle Biden-era rules by instructing agencies to identify regulations that might be at risk under the new legal framework. Howerver, is the celebration over the end of the administrative state premature? Some legal experts view Loper Bright as “a Rorschach test inside a crystal ball” indicating that its impact could be more complex than anticipated, with different interpretations likely to emerge.

Featuring:

• Helgi Walker, partner at Gibson Dunn and co-chair of their administrative law and regulatory practice group
• Rebecca Rainey, senior labor department reporter for Bloomberg Law
• Cary Coglianese, professor at the University of Pennsylvania Carey Law School and director of the Penn Program on Regulation

Special thanks to Bloomberg Law environment reporter Jennifer Hijazi for her assistance with this episode.

Listen and subscribe to UnCommon Law on Apple Podcasts, Spotify, Megaphone, or Audible.

This transcript was produced by Bloomberg Law Automation.

TRANSCRIPT:

[00:00:00]

Host: Find all the case information you need, faster. Smart litigators rely on Bloomberg Law’s broad litigation news coverage and our market-leading dockets. Now with AI-driven search and analytics, customized alerts, and expansive state court coverage. Visit pro.bloomberglaw.com for everything you need to win.

Host: As Churchill said, this is not the end, it is not even the beginning of the end, but it is perhaps the end of the beginning. And that puts me, forgive me, that puts me in a celebratory mood.

Host: Last fall, at a Federalist Society panel on the future of administrative law, Columbia law professor Philip Hamburger was feeling a little frisky.

Professor Philip Hamburger: The glasses are full, but I want them to overflow, right? May our glasses all overflow. I have a toast.

Host: On this panel of law professors, attorneys, and even a couple of sitting federal judges, Professor Hamburger poured several glasses of champagne and led them all in a toast to the demise of the administrative state. The death of the Chevron doctrine at the hands of Loper Bright was cause for celebration. But it wasn’t just Loper Bright he was celebrating. Other cases that term could cripple the way federal agencies wield their power.

Professor Philip Hamburger: To Jarkissi, to Axon Cochran, to Cornerpost, to Loper Bright, to Relentless, and all the other wonderful cases, and to all of you, to all of you who seek a revival of our constitutional freedoms. Bravo.

Panelists: Cheers. Cheers. Cheers. Cheers. Cheers.

Host: Today on Uncommon Law, we’ll take you on a whirlwind tour of administrative agencies as we learn how these cases have, as Professor Hamburger put it, deflated the judicial pretenses of the administrative state and have already begun to reshape the rules that govern our country. But are foes of the administrative state celebrating too soon?

Host: It’s been a little over a year since the Chevron doctrine was overturned, since the Supreme Court ruled in a six to three decision along ideological lines that courts don’t have to defer to agencies’ reasonable interpretations of ambiguous laws. Nearly the same day Loper Bright was decided, lower courts began citing it to block agency regulations. Researchers are still crunching the numbers, but according to a Minnesota Law Review article, in just the first six months after Loper Bright, courts cited the case more than 400 times. And lower federal courts have invalidated new agency rules almost 84% of the time. That’s close to a complete reversal from the heydays of Chevron, when, according to a 2017 Michigan Law Review article, federal agencies had a 77% chance of prevailing when circuit courts applied the Chevron doctrine.

Host: This is all preliminary, of course. No one knows where the courts will ultimately land on this, or how much deference agencies will get once the dust settles. But already, over the past year, Loper Bright has had a major impact across industries and domains, from labor rules to environmental protections, and plenty of things in between. We’ll talk about many of them today, but first, perhaps the biggest domino to fall so far has been something we’ve already touched on in this series, net neutrality.

Guests: That was a big case that we won on net neutrality. They won’t even appeal it because it’s a very hard case to appeal, but it was a tremendous victory in terms of speed and in terms of investment.

Host: In January, the Biden administration’s net neutrality rules were struck down. It was the latest reversal in a series of reversals going back more than 15 years.

Host: So it’s been like a ping pong match between administrations, depending on generally whether Democrats or Republicans were in charge.

Host: Helgi Walker is a partner in the Washington, D.C. office of Gibson, Dunn and Crutcher, co-chair of their administrative law and regulatory practice group, and apparently a champion ping pong player.

Helgi Walker: The current Sixth Circuit opinion dealt with an order that had been issued during the Biden administration, which undid an order issued during the Trump administration, which undid an order issued during the Obama administration, which undid orders issued during the Bush and the Clinton administrations.

Host: Walker represented CTIA, that’s a trade association that represents the wireless communications industry, in the latest challenge to the net neutrality rules. And Walker says that now, after all this time, the ping pong match might finally be over.

Helgi Walker: Unless they come up with some brand new theory that nobody has thought of in almost 20 years, I would say it’s dead at the FCC.

Host: Yes, Loper Bright changed everything. Why was there so much flip flopping? How did Loper Bright change everything and why, barring action by Congress, could net neutrality be gone for good?

Host: Every day, well over two million coins are dropped into New York’s public telephones. Telecom regulation is complex, and this episode is not going to offer you a primer on the Telecommunications Act of 1996. All you have to know is that when it comes to net neutrality, there’s a partisan divide. Democratic lawmakers tend to worry that if the big telecom companies control the pipes, they could prioritize web traffic to the biggest spender, speeding up traffic for companies that pay more, slowing it down for companies that pay less, imperiling the free and open Internet that’s been so important for innovation and freedom of expression.

Advocate: Hi, everybody. Like this guy says. Abandoning these principles would threaten to end the Internet as we know it.

Host: But conservatives worry about government overreach, about shackling the big Internet service providers with regulations. They say it’s the net neutrality regulations themselves that could reduce investment and stifle innovation.

Ajit Pai (former FCC chair): It has impeded investment in next generation networks. These regulations are preventing smaller companies in particular from spending capital to build out networks to connect Americans with digital opportunity.

Host: So for the past couple of decades, every time a new president took the White House, the Internet policy of the federal government has done a 180. This is where Chevron comes in.

Helgi Walker: You’ve now been studying Chevron on your show for long enough to know that as long as the agency’s reading is not nuts, the agency wins. So that’s why the Sixth Circuit opinion is such a big deal, because for the first time, the agency didn’t get the benefit of any doubt. The court looked at the text of the Telecommunications Act and said it seems like Congress meant for broadband providers to be a lightly regulated information service, not a heavily regulated telecommunications service. So the FCC doesn’t actually have the power to impose net neutrality rules.

Host: The fight to save net neutrality has come to an end after nearly two decades. This after a U.S. appeals court struck it down yesterday.

Host: The FCC has been fighting to regulate broadband providers as utilities so it could protect net neutrality. But the appeals court ruled the FCC does not have that authority.

Helgi Walker: Loper Bright means we can now end the FCC’s vacillations. That was the language the court used. And now we just apply traditional tools of statutory construction and determine what is the best reading of the statute.

Host: This is why that professor was popping champagne. Under Chevron, courts often had to defer to agency interpretations, but not anymore.

Host: Is net neutrality really dead?

Helgi Walker: I would say so. I mean, it is dead at the FCC. But to my point about Loper and why it’s not the end of the world for people who maybe think net neutrality is a great policy, Congress could pass net neutrality legislation. And that’s actually a better outcome for everybody, because that way we have democratic accountability, we have clear guidance and we don’t have unelected bureaucrats making really important national policy. So I would say it’s dead at the FCC, but Congress can always legislate in the area.

Host: Helgi Walker, thank you so much for joining me. This was a lot of fun.

Host: The telecommunications industry is just the beginning. Let’s turn now to labor, where courts have cited the doctrine to end several Biden initiatives. Joining us to discuss is Bloomberg Law’s senior Labor Department reporter Rebecca Rainey.

Rebecca Rainey: Thanks for having me.

Host: You’ve got one of those cool names that are the same letter, right? Like Lois Lane.

Rebecca Rainey: Yeah, it’s the alliteration. It’s a perfect reporter name.

Host: Yes. No, I’ve always been told I should have been a meteorologist, but I love I love covering labor. I like I like nerding out.

Rebecca Rainey: Let’s nerd out together about Loper Bright’s impact on labor regulations.

Host: OK. So Loper Bright has already upended rules around the way employers pay tipped employees. Explain to me what happened.

Rebecca Rainey: Yeah. So it all comes down to a philosophical question. If a bartender is cutting lemons, are they still a bartender?

Host: Yes.

Rebecca Rainey: So is a tipped employee still a tipped employee if what they’re doing isn’t something that they usually get tips for?

Host: Yep, that’s right.

Rebecca Rainey: That’s deep.

Host: It is. It is. And the federal government was thinking about this?

Rebecca Rainey: They were. So you know how if you get tips in the course of your job, your employer doesn’t have to pay you the minimum wage. They can pay you a lower hourly rate.

Host: Right. Because tips usually make up the difference.

Rebecca Rainey: Right. It’s a pretty low wage, right? It’s like two dollars an hour.

Host: Yes.

Rebecca Rainey: So it’s two dollars and 13 cents an hour. And this is all because of a law passed by Congress called the Fair Labor Standards Act.

Host: What we call the wages and hours bill.

Rebecca Rainey: That act established the federal minimum wage, didn’t it?

Host: FDR was adamant that businesses could handle it.

FDR (archival): Do not let any calamity howling executive with an income of a thousand dollars a day tell you that a wage of eleven dollars a week is going to have a disastrous effect on all American industry.

Rebecca Rainey: That’s right. But in the 1960s, Congress gave employers a little bit of a break by implementing the so-called tip credit that lets employers pay tipped employees less than the federal minimum wage.

Host: Tipped employees. Got it. And that’s where cutting lemons comes in.

Rebecca Rainey: Exactly. So say you work as a bartender. Most of the time you’re pouring drinks, you’re talking to the old lady sitting by herself at the end of the table, you know, the kind of things that kind of get you tips. But what if part of your job involves preparing lemon wedges for drinks? You’re doing work that’s related to your main job of serving, but it doesn’t actually earn you tips directly.

Host: OK, so I’m in the back cutting lemons. So I’m not working with customers, yet I’m still only making two bucks an hour and I’m not getting tipped.

Rebecca Rainey: That’s right.

Host: Rebecca, I know I’m supposed to be an objective reporter, but that doesn’t seem fair.

Rebecca Rainey: Yeah. And, you know, the Biden Department of Labor agreed. They did not think that this was fair. So they came up with a new rule. They said if a worker is spending more than 20 percent of their time doing side work or tip supporting work, that employers need to pay them the full minimum wage of seven dollars and 25 cents.

Host: So if I’m a bartender and I’m working 40 hours a week and I spend more than 20 percent of the week on side work, tip supporting work, more than eight hours in the week, my employer pays me more during that time?

Rebecca Rainey: Yes. They would have to pay the minimum wage during that side work time since you’re not making tips then.

Host: Hang on. I’m going to do the math.

Rebecca Rainey: OK.

Host: That averages out to about an hour and 36 minutes a day. So you’re saying that if I don’t spend quite that same amount of time on side work, say I’m only cutting lemons for an hour and 35 minutes, then I don’t make more money?

Rebecca Rainey: Basically, unless, and this is a little wrinkle, unless you spend 30 continuous minutes in a single stretch, then you do get paid more. It was known in the industry as the 80-20-30 rule, except they calculate it weekly, not daily.

Host: Rebecca, this all sounds very confusing. So if it does go above 20 percent, then I do get what? The money? Or the tips?

Rebecca Rainey: You get the full minimum wage.

Host: How are employers going to keep track of this?

Rebecca Rainey: That is exactly what employers who sued over this said. Businesses had really complained that, how are we supposed to keep track of each individual tips workers’ time spent on these certain tip duties versus their side work? And more importantly, they said the Department of Labor didn’t have the power to do this, and they sued.

Host: A lawsuit. OK. Here’s where we shine. So the statute here is the Fair Labor Something Something.

Rebecca Rainey: The Fair Labor Standards Act.

Host: A Fair Labor Standards Act. I believe that is exactly what I thought I just said. Did the act say anything about what the phrase tipped employee means?

Rebecca Rainey: The specific language in the law says that a tipped employee means, and I quote, any employee engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips.

Host: That’s it?

Rebecca Rainey: Yeah.

Host: Did it define customarily?

Rebecca Rainey: No.

Host: Regularly?

Rebecca Rainey: No.

Host: Anything in there about cutting lemons?

Rebecca Rainey: No. Lemons were not mentioned in the text of the law.

Host: Well, we know it used to happen. Under the Chevron doctrine, when a law is silent or ambiguous. The agency gets deference as long as their rule is reasonable.

Rebecca Rainey: As long as the agency’s reading is not nuts, the agency wins.

Host: But as we know, the Chevron doctrine was overturned last year. So what happened with this lawsuit?

Rebecca Rainey: So there are a couple of different things. Back in 2023, when agencies still got Chevron deference, a district court judge looked at the rule, looked at the Fair Labor Standards Act and said, the text of the law is unclear. The law didn’t go into a lot of detail on what exactly a tipped employee is.

Host: Yeah, exactly.

Rebecca Rainey: So the court applied the Chevron doctrine and defers the agency’s interpretation. But the restaurant groups appealed.

Host: Of course they did.

Rebecca Rainey: Yes. So then while the appeal was going on, the Supreme Court comes in and says.

Supreme Court (archival): The time has come to leave it behind. Chevron is overruled.

Rebecca Rainey: So while this appeal is ongoing, Chevron falls.

Host: Yes. And that changed everything.

Rebecca Rainey: The Fifth Circuit Court of Appeals says Chevron isn’t a thing anymore. We don’t have to defer to whatever the Department of Labor thinks about what a tipped employee is. Under Loeb or Bright, the court gets to apply its own independent judgment. And they do. They look at the text. They say, hey, Department of Labor, you’re really reading a lot into this tipped employee language. Congress never said you could put in all this stuff about side work. And the court throws out the rule.

Host: Wow. So that’s a real world example of how Loeb or Bright is changing things.

Rebecca Rainey: Right. So the answer to that question of yours, if a bartender is cutting lemons, is he still a bartender? He is. He is. He’s still a bartender. He still gets that two bucks an hour, even though he’s doing work that he doesn’t get tipped for.

Host: Right. Because the Department of Labor didn’t have the authority to go in and muck about with the tipped credit employee language.

Rebecca Rainey: Exactly.

Host: Rebecca Rainey, thank you so much for making labor law a little bit less confusing.

Rebecca Rainey: Happy to be here. And since we’ve been at this less than half an hour, I don’t have to pay you minimum wage.

Host: That’s right.

Host: Now that Chevron has fallen, courts don’t always strike down agency actions. Sometimes they still defer to the agency. But the thing about Loeb or Bright is that now when a law is unclear, even if an agency interpretation is reasonable, the courts don’t have to defer to the agency anymore.

Host: Speaking of that, and while we’re still on the topic of labor, remember our season on the FTC’s nationwide non-compete ban?

Guests: This can’t be right. She can’t own these people. She can’t own me.

Host: Excellent season. You should totally go back through the feed, find those episodes and listen. But also, a court cited Loeb or Bright to block that one, too. And I quote, the commission has exceeded its statutory authority in promulgating the non-compete rule.

Host: But Loeb or Bright isn’t just something for courts to cite as they come to their own conclusions. The administration has been wielding Loeb or Bright, too, in combination with some other recent Supreme Court decisions, almost like a kind of regulatory chainsaw.

Guests: The chainsaw for bureaucracy. Chainsaw!

Host: When we return, we’ll hear about some of the regulations on the chopping block as Trump and his team try to flex their deregulatory muscles. Stick around.

[00:30:00]

Host: In a global tax landscape that changes by the day, it’s what you don’t know that can leave you exposed. At Bloomberg Tax, we provide market leading intelligence and practical applications to help tax professionals work smarter, faster and more accurately. Our solutions provide the insights you need for game changing outcomes. To revolutionize your performance in real time. The difference is Bloomberg Tax. Learn more at pro.bloombergtax.com.

Host: From day one, President Trump has been signing executive orders with a vengeance.

President Trump: But we’ve had a lot of fun doing it, too. It’s a pleasure to do it. We just rip down whatever they’ve done. It’s almost like I want to just do one executive order. Anything he signed is now terminated. It’s easier than, you know, point after point after point. I sign and sign. Just do one. Everything he signed is no good because that’s really what basically what’s going on.

Host: One of the orders he signed, which implemented the Department of Government Efficiency, also directed the heads of all executive departments and agencies to repeal so-called unlawful regulations.

President Trump: Take a look at rules that no longer have a strong statutory basis, where the prior administrations were playing fast and loose with their statutory authority. And let’s get rid of those. And we’re going to get rid of them. We’re going to get rid of them. We’re going to get rid of them. We’re going to get rid of them. Let’s get rid of those.

Host: This is Kerry Colonisi, a professor at the University of Pennsylvania Kerry Law School.

Kerry Colonisi: I am also the director of the Penn Program on Regulation.

Host: And more importantly, you are a former guest on Uncommon Law.

Kerry Colonisi: It’s my pleasure to be back. Thank you for having me.

Host: So tell me about this presidential directive.

Kerry Colonisi: This was an executive order that said that agencies should look for regulations to rescind. And the agencies are doing this with vigor.

President Trump: Today, I’m pleased to make the largest deregulatory announcement in U.S. history.

Lee Zeldin (EPA head): EPA will be reconsidering many suffocating rules that restrict nearly every sector of our economy and cost Americans trillions of dollars. Today, the Green New Scam ends as the EPA does its part to usher in the golden age of American success.

Host: The FCC has started its own proceeding called Delete, Delete, Delete.

Brendan Carr (FCC chairman): Just because something has been on our books at the FCC for 30 years, we’re not going to keep it there out of any sense of inertia.

Host: So in addition to the executive order, the White House put out a memo a couple months later citing a bunch of cases that supposedly bolster its authority to eliminate regulations. Lots of cases that Bloomberg Law subscribers may be familiar with West Virginia versus EPA, the so called major questions doctrine case.

Guests: I’m going to give three cheers to the major question, doctor. This is a major question because it allows EPA to determine what the power sector.

Host: The court says that whenever an agency wants to enact a regulation of great economic or political significance, it has to have very clear statutory authority. Another case listed on the memo was SEC versus Jarkissi, which makes it harder for agencies to exact big fines for things like fraud.

Kerry Colonisi: Right. That’s right. You can’t legislatively sort of work your way around the Seventh Amendment jury trial.

Host: Right. But right at the top of the list, Loper Bright.

Kerry Colonisi: That’s top of the list. I think that’s interesting, isn’t it, that that’s top of the list.

Host: Why is that interesting to you?

Kerry Colonisi: Because in some ways, Loper Bright and its rhetoric is all about shifting this authority and power to interpret the law from what was thought to be in the agency’s hands under Chevron to now putting it squarely back in the judiciary’s quarters. And yet what’s interesting and why this is interesting that this is at the top of the list. Here we have a command that says agencies go and revisit and reassess and reinterpret all of your statutes.

Host: OK, so Loper Bright is supposed to be all about shifting the power away from agencies, saying to agencies, we are not going to defer to your interpretation of the statute that gives your agency power. And yet the Trump administration is citing Loper Bright and these other cases as a kind of wide ranging grant of power to do exactly that.

Kerry Colonisi: Exactly. it’s sort of an open-ended invitation for agencies now to do more what? More interpretation of their statutes. Precisely what Loper Bright says is not permissible. It’s not for the agencies to be doing this interpretation and yet here we have Loper Bright being used as the justification for what arguably could be a wholesale reinterpretation of agency statutory authority.

Host: If this all feels contradictory, well yeah that’s it’s kind of the point. That’s why the professor finds it all so ironic and we’ll see what the judiciary does with it but given that courts are now supposedly the ones with the power to decide, the agency’s interpretation of their own authority might not get as much deference as they’re hoping.

Professor Philip Hamburger: May our glasses all overflow. I have a toast. To Jarkissi. To Axon Cochran. To Loper Bright.

Panelists: I was on that panel at the Federalist Society.

Host: Really?

Panelists: Woo! There were champagne flutes set out at the table we were all sitting at at the beginning and I wasn’t really sure why and then out pops a bottle of champagne that he uncorks and he makes a toast to the progress that has been made and...

Host: What did you think when you saw that?

Panelists: I was perhaps a little bit of surprised to be put into a kind of a peer pressure position to be toasting. You’ve got an audience of 700 people in front of you and you know one wants to be sociable right? And so forth but...

Host: So did you hold the glass?

Panelists: No, no I didn’t. I did not join in the toast. I don’t know that it’s appropriate for academics in my view to be celebrating or not celebrating you know these sorts of things so it was highly unusual and quite notable that two federal judges also joined in.

Host: Setting aside the ethics question of a judge or a professor toasting to the diminished power of federal agencies, the toast surprised you for another reason didn’t it?

Kerry Colonisi: You know one of the things that I said in my remarks there was it’s not clear what there might even be from his standpoint to celebrate. I’m happy to talk about why I think it may be premature to celebrate what it means for administrative governance from the last term.

Host: Yes, Professor Colanese says, we have seen several instances of courts striking down regulations but that doesn’t necessarily mean the tide has turned against agency power. When it comes to the import of Loper Bright, the jury is still out. There are still other kinds of judicial deference like Skidmore deference which lets courts give weight to agency interpretations if they are persuasive and over the long term, Colanese says, courts which are generalists might still end up deferring to the expert agency Chevron deference or not.

Kerry Colonisi: These are very complex issues and I don’t mean to to say that Loper Bright is trivial or insignificant but rather to say that maybe its real import has been more symbolic than substantive. There are so many parts of the Loper Bright decision that say that agencies are entitled to great respect in deciding cases. In a recent law review article, Colanese and co-author Dan Walters of the Texas A&M Law School characterized Loper Bright as a Rorschach test inside a crystal ball. Different people see different things in it and they largely see what they want to see. You can focus on Chevron is overruled or you can focus on those passages that read an awful lot like Chevron itself but just with a little different terminology. Whether you call it Chevron deference or not, agencies may well continue to prevail. Courts may, whether they’re citing a two-step process or not, nevertheless say, gee, I can’t figure out what the statute means. It’s not obvious. I should go with my co-equal branch of government and what it says the statute means, especially on some of these highly technical issues. So the longer you go out, I think the harder it is to predict what the effects might be.

Host: Professor Colanese, thank you once again for sharing your wisdom with us.

Kerry Colonisi: Thank you very much, Matthew. It’s great to be with you.

Host: In a sign, perhaps, that maybe the champagne toast was premature, after the Supreme Court overruled Chevron and sent that industry-funded monitoring case back to the lower courts, the fishermen in Relentless, the sister case to Loper Bright, lost in court. A district court ruled against the fishermen and for the agency, the National Marine Fishery Service. The court noted that Loper Bright directs it to exercise its independent judgment and found that, in its opinion, the agency has the right to require industry-funded monitoring, even though Congress never explicitly said so. The fishermen we visited at the start of the season are currently in settlement talks with the government.

Host: That’s it for this episode of Uncommon Law. Join us next time for the season finale, when we explore how the fall of Chevron might prompt Congress to rethink the way it writes laws.

Guests: There’s a lot of people who say the president wants this authority, we’ll keep this purposely vague so the president can do whatever the president wants to do. And what I would say is shortcuts don’t work, so let’s just do the tough work.

Host: Uncommon Law was produced and hosted by me, Matthew Schwartz. I also did the sound design for this episode. My editor is Josh Bloch, who is the executive producer for videos and podcasts here at Bloomberg Industry Group. Special thanks to all our guests. Special thanks also to Bloomberg Law environment reporter Jennifer Hejazi for all of her help with this episode. Our cover art was designed by Jonathan Hurtarte. An additional thank you to Keith Perrine, Tom Taylor, and Cesca Antonelli. See you next time.

[00:59:00]

Host: Attention smart litigators. When it comes to executing your case strategy, Bloomberg Law’s continuous innovation is your secret weapon. And now we’re taking it up a notch, introducing enhanced docket features with AI-driven search and analytics, lightning-fast customized alerts, and expanded state court docket coverage. Plus, we’ve substantially increased our litigation news coverage, so you’ll never miss a beat. Don’t wait. Visit pro.bloomberglaw.com today and get everything you need to secure big wins.