The U.S. Supreme Court’s June 26 decision in Loper Bright Enterprises has significant ramifications for administrative law, specifically by overturning the Chevron-deference doctrine. Chevron deference, established by the 1984 case of the same name, directed courts to defer to agency interpretations of ambiguous statutes that the agency administers—as long as the interpretation was reasonable. Under Loper, courts no longer need to defer to agency interpretations of ambiguous statutes. The removal of Chevron deference marks a profound shift in the balance of power between the judiciary and administrative agencies. Contractors subject to OSHA and other federal agencies and their counsel should watch upcoming agency decision-making and developments in the courts to be well-positioned to flexibly adapt to a dynamic business and regulatory environment.
Chevron Deference
Chevron deference allowed federal agencies significant leeway in interpreting statutes, promoting expertise and policy consistency. This deference presumed that agencies possess specialized knowledge and political accountability. But critics argued that it granted agencies too much power, potentially leading to regulatory overreach.
The Loper Decision
The Supreme Court’s decision in Loper invalidated Chevron deference, emphasizing that courts must no longer defer to agency interpretations of ambiguous statutes. Instead, courts now must interpret ambiguous statutes independently, without presuming agency expertise.
Impact on Contractors Overall
For contractors, particularly those engaged in federal projects, the elimination of Chevron deference introduces increased legal uncertainty. Contractors have traditionally relied on stable and predictable agency interpretations of regulations. Without Chevron, contractors may face varied judicial interpretations, complicating compliance efforts and increasing litigation risks.
Contractors may also need to adjust their compliance strategies. Agencies like OSHA will continue to enforce regulations, but their interpretations may face more frequent legal challenges. Contractors must stay abreast of evolving judicial interpretations and be prepared to adjust their practices accordingly.
The likelihood of increased litigation is significant. Contractors disputing agency decisions will rather seek judicial review, given that courts will now engage in de novo review of statutory interpretations. This could lead to a surge in court cases, with contractors challenging OSHA’s regulatory interpretations and enforcement actions.
Impact on Contractors Vis a Vis OSHA
OSHA, responsible for ensuring workplace safety, has relied on Chevron deference to enforce and interpret safety standards. The removal of this deference could constrain OSHA’s regulatory authority, because courts will now scrutinize OSHA’s interpretations more rigorously.
OSHA’s ability to enforce safety regulations may be impaired. Courts may diverge from OSHA’s interpretations, potentially leading to inconsistent application of safety standards across jurisdictions. This variability could undermine OSHA’s efforts to maintain uniform safety standards nationwide.
Impact on Rulemaking and Enforcement
OSHA may face challenges in rulemaking. Agencies typically issue regulations based on statutory mandates, and the absence of Chevron deference means that courts could invalidate rules if they find the agency’s statutory interpretation unreasonable. This may lead OSHA to adopt more conservative and narrowly tailored regulations and rule-based enforcement. This may leading to more predictability for contractors navigating OSHA’s rulemaking and enforcement about emerging workplace hazards—typically the area of greatest activity by OSHA.
Key Points
The Supreme Court’s decision in Loper to overturn Chevron deference represents a fundamental shift in administrative law with significant implications for contractors subject to OSHA and other federal agencies. Contractors will face increased legal uncertainty and potential litigation. This decision reshapes the balance of power between the judiciary and administrative agencies, heralding a new era of judicial scrutiny over agency interpretations and enforcement actions. As the legal landscape evolves, contractors and their counsel must remain vigilant and adaptive to navigate the complexities of this transformed regulatory environment.
