How the Changing Law of Chevron Deference Might Affect Texas

On Jan. 17, the U.S. Supreme Court heard oral arguments in two matters, Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce, that could significantly change how federal courts are to review decisions made by federal agencies. Since 1984, Chevron USA v. Natural Resources Defense Council set the standard for when courts should defer to an agency’s interpretation of a law and became an essential component of modern administrative law. Commonly referred to as “Chevron deference,” the Supreme Court held generally that if a court determines a statutory provision is ambiguous, it should defer to the agency’s interpretation so long as the agency is charged with administering the statute and its interpretation is reasonable.

In practice, Chevron deference has often allowed federal agencies to “fill gaps” and implement policy decisions in areas such as environmental, health, safety and financial standards where the statute may not be express. A central tenet to the doctrine is that agencies are experts in their field and better suited to interpret statutes in their area of expertise than the courts. However, the issues before the Supreme Court in Loper Bright Enterprises and Relentless, Inc. call the doctrine’s viability into question.      

The question at issue in both cases is whether the National Marine Fisheries Service may require domestic fishery vessels to pay the salaries of third-party monitors who are required to be onboard the fishermen’s boats to collect data and ensure fishing quotas are not exceeded. Under the Magnuson-Stevens Act, NMFS has authority to develop regulations relating to the management and conservation of the nation’s fisheries. NMFS may require domestic fishery vessels to carry “observers” onboard of their vessels for the purpose of collecting data and to ensure fishing quotas are followed. However, in 2020, NMFS issued a rule requiring domestic fishing vessels in the New England region to not only board observers on their ships, but to also hire and pay for third-party monitors carrying out the duties of NMFS’s regulations onboard their boats.

Members of the regulated community were quick to assert the NMFS did not have authority to create an industry funded monitoring program that would be paid for by the fishermen. In challenges to the rule filed in New Jersey and Rhode Island, lower courts applied Chevron deference upholding NMFS’s regulation citing to general provisions such as statutory authority to make rules “necessary and appropriate” for the conservation of fisheries.  Similarly, the U.S. Court of Appeals for the District of Columbia determined the agency’s promulgation was not unreasonable within the construct of the statute.

Petitioners to the Supreme Court asked that the Court overturn or significantly amend the Chevron deference doctrine arguing, among other things, that Chevron deference undermines Article III of the U.S. Constitution by punting the court’s obligation to interpret the meaning of federal statutes to the agencies. The U.S. solicitor general, on behalf of NMFS, argued that overturning Chevron, which has been relied on and ingrained in administrative law for 40 years, would create significant upheaval in the law because thousands of judicial decisions — 77 Supreme Court decisions and over 17,000 lower court decisions — related to agency rulemakings and adjudications would become open to challenge and create profound disruption and the potential to reopen those decisions.

During questioning at oral argument, a majority of the justices appeared ready to either overrule Chevron or, at minimum, limit its application. Rejecting the notion that changing Chevron would create instability, Justice Neil Gorsuch seemed receptive to replacing Chevron with other approaches, such as “Skidmore deference” pronounced in Skidmore v. Swift & Co. where a court may adopt an agency’s interpretation after listening to both sides and being persuaded by the government’s position. Other justices, such as Justice Elena Kagan, suggested a desire for the status quo stating that there are genuine ambiguities in law and, as unanticipated facts arise or develop, it is rightfully up to agency experts to fill in the gaps. Justice Ketanji Brown Jackson expressed concern that the demise of Chevron deference would force courts, rather than agencies, to become policymakers. Chief Justice John Roberts noted that Chevron has not been cited by the court for 14 years and wondered if the doctrine had already been overruled in practice.

It appears likely that a shift in what deference is afforded to an agency is likely even if Chevron is not overruled outright.  The decision will likely have profound implications for executive agencies in how they promulgate and implement rules and adjudicate matters within their purview. It also raises important implications for the regulated community subject to regulations, including a potential newfound ability to contest agency decisions in court.

Implications for the State of Texas

While the Texas Supreme Court has not adopted Chevron deference in name, it has adopted its functional equivalent in practice. In Railroad Commission of Texas v. Texas Citizens for a Safe Future, the Texas Supreme Court stated it has long held the Court would give “serious consideration” to an agency’s interpretation of a statute it is charged with enforcing so long as the agency’s interpretation does not contradict the statute’s plain language. In expounding its deference analysis, the Texas Supreme Court conceded its analysis is similar to the analysis of federal courts applying Chevron deference and noted that the Court will generally uphold an agency’s interpretation so long as it is reasonable within the construction of the statute.

At issue in Texas Citizen was a statute which required the Railroad Commission to consider whether the installation of an injection well is in the “public interest” prior to granting an injection well permit. Protestants to an injection well argued the Railroad Commission failed to consider the public interest in the permitting process by not considering traffic-safety related issues that would arise from the installation of the well. The commission, on the other hand, asserted that its consideration of the “public interest” was not an open-ended inquiry on public safety issues, but that the Court should defer to the commission’s interpretation of “public interest,” which focused solely on the proposed well’s effect on the conservation of natural resources.

In finding the commission’s interpretation reasonable and in accord with the plain language of the statute, the Texas Supreme Court upheld and deferred to the commission’s interpretation of “public interest.” And, most notably, the Texas Supreme Court explicitly rejected the “best interpretation” test — one of the approaches advocated by the petitioners in Relentless, Inc. and Loper Bright Enterprises — stating “we only require an agency’s interpretation of a statute it is charged with administering to be reasonable and in accord with the statute’s plain language, we need not consider whether the commission’s construction is the only — or the best — interpretation in order to warrant our deference.”

Since the Texas Supreme Court’s decision in Texas Citizens in 2011, the case has been cited 243 times, and the deference doctrine largely mirrors the application of the Chevron deference. First, Texas courts only apply agency deference to formal agency opinions adopted after formal proceedings and only towards statutes a particular agency is charged with administering. Then the courts will look as to whether the statute is ambiguous. If so, then Texas courts determine whether the agency’s interpretation conflicts with the plain language of the statute. If the agency’s interpretation is reasonable within the construct of the statute, the Texas courts will generally uphold the agency’s interpretation.

One area where Texas state jurisprudence differs from federal jurisprudence in the application of agency deference is that Texas courts rarely get beyond the ambiguity analysis and will generally find statutes unambiguous, thus negating the need to apply agency deference. However, in response to an official Texas attorney general opinion request relating to the agency deference standard in Texas, the Texas attorney general’s office failed to find one instance where a statute was determined to be ambiguous and the agency was not afforded deference in Texas jurisprudence. Accordingly, under the current framework, if a statute is determined to be ambiguous, one can expect with reasonable certainty that Texas courts will defer to an agency’s reasonable interpretation.

While a decision in Relentless, Inc. and Loper Bright Enterprises will not be binding on Texas courts, the decision could be very persuasive and serve broad implications for Texas jurisprudence. The Texas Supreme Court is currently comprised of textualist justices who are prone to focusing on the plain meaning of the language within a statute rather than consulting a statute’s legislative history. Accordingly, the Texas Supreme Court’s judicial philosophy appears more in line with the positions asserted by the petitioners in Relentless, Inc. and Loper Bright Enterprises in that it is the responsibility of the courts to determine statutory meaning, not executive agencies. If the U.S. Supreme Court overturns or weakens Chevron deference, one should not be surprised if the Texas Supreme Court adopts a doctrine in line with the Relentless, Inc. and Loper Bright Enterprises outcomes.