Judicial Independence in Statutory Interpretation: US Supreme Court Restores Balance of Power in Administrative Law

Introduction

The landmark decision in Loper Bright Enterprises v. Gina Raimondo, Secretary of Commerce[i], marks a pivotal moment in the United States (‘US’) administrative law. In a significant ruling, the Supreme Court of the US (‘SCOTUS’) overruled the Chevron doctrine as laid down in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc.[ii]. This long-standing principle required courts to defer to administrative agencies’ interpretations of ambiguous statutes. Established in 1984, Chevron significantly influenced judicial review, often shifting the balance of power in favour of federal agencies. By dismantling this doctrine, SCOTUS has fundamentally reasserted the judiciary’s role as the ultimate decider of statutory meaning, a function grounded in Article III of the US Constitution.

The Chevron doctrine provided a 2-step approach to resolving ambiguities in statutes:

• Step 1: The court determines whether the legislature has directly addressed the precise question at issue in the statute. If the statutory language is clear, the inquiry ends, and the court enforces the statute according to its plain meaning.

• Step 2: If the statute is ambiguous or silent on the specific issue, the court defers to the relevant agency’s interpretation as long as it is reasonable, even if the court would have interpreted the statute differently.

This case arose from challenges by the Petitioner and other similarly placed entities against a rule promulgated by the National Marine Fisheries Service (‘NMFS’) under the Magnuson-Stevens Fishery Conservation and Management Act (‘MSA’), which mandated that certain fishermen bear the costs of onboard observers. The legal battle centred on whether Chevron’s doctrine, which heavily relied on the agency’s interpretation of the statute, should continue to guide courts when resolving statutory ambiguities. The decision of the SCOTUS addressed the broader implications of Chevron on judicial independence, with far-reaching consequences for the interpretation of federal statutes, particularly those involving regulatory agencies in the US. The decision offers comparative insights for Indian jurisprudence, as it provides a perspective on statutory interpretation in light of the separation of powers.

Brief Facts

• The Petitioner, along with other small fishing businesses, challenged the NMFS rule requiring them to pay for observers on their vessels. This mandate stemmed from an amendment to fishery management plans under the MSA, aimed at conserving fishery resources.

• The NMFS, under the Secretary of Commerce, had previously funded observer coverage but later amended its rules to shift this financial burden to fishermen. This change significantly impacted businesses, with daily costs of up to $710 per observer, reducing annual returns by as much as 20%.

• In this regard, both the District Court and the Court of Appeals ruled in favour of the NMFS, surrendering to the agency’s interpretation under Chevron. The courts concluded that the statutory text was ambiguous regarding who should bear the cost, and therefore, on application of the Chevron doctrine, the agency’s interpretation was deemed reasonable.

• The Petitioner argued that the Chevron doctrine allowed agencies undue power to interpret laws to their advantage, thereby encroaching on the judiciary’s duty to independently interpret statutes.

Held

• The SCOTUS overruled Chevron and held that the Chevron doctrine was inconsistent with the Administrative Procedure Act (APA)[iii], which mandates that courts, not agencies, decide all relevant questions of law, including statutory ambiguities. The SCOTUS emphasized that deference to agency interpretations of law cannot override the judiciary’s constitutional role.

• Regarding the liability of costs for onboard observers, SCOTUS determined that the NMFS did not have the authority under the MSA to require fishermen to bear the costs. The Court ruled that any ambiguity in the statute regarding who should pay for observer services could not be resolved in favour of the NMFS through deference, as Chevron no longer applied. Thus, the liability of costs could not be imposed on the fishermen without express statutory authorization.

• Citing Article III of the US Constitution and historical precedents, SCOTUS highlighted that it is the ‘province and duty of the judicial department to say what the law is’. The ruling reaffirmed and restored the judiciary’s exclusive authority to interpret statutory provisions, rejecting any approach that diminishes this role.

• The top Court reasoned that statutory ambiguities do not equate to implicit delegations of power to agencies. Instead, ambiguities should be resolved by courts using traditional tools of statutory construction to identify the best reading of the statute. In rejecting the NMFS’s interpretation, the Court noted that statutory silence or ambiguity does not imply a grant of authority to agencies to decide policy matters and emphasized that only clear delegations of power from the legislature can permit agencies to act, thereby ensuring that such actions remain subject to rigorous judicial scrutiny.

• The SCOTUS heavily criticized Chevron’s presumption that the legislature intended for agencies to resolve ambiguities, stating that agencies lack special competence in statutory interpretation. It also noted that deferring power to agencies often disrupts the principle of separation of powers, as it transfers interpretative authority away from the judiciary to executive bodies.

Our Analysis

In overruling Chevron, the decision of the SCOTUS resonates with Indian judicial principles, where courts have traditionally maintained a firm stance on statutory interpretation without deferring to executive agencies. While India’s government structure is more centralized compared to the federal setup of the US, the principle that ambiguities in statutes are always for the judiciary to resolve is well-settled in Indian law. Indian courts have consistently emphasized the judiciary’s role in ensuring that administrative actions adhere to statutory limits.

In NHAI v. Pandarinathan Govindarajulu & Anr.[iv], the Supreme Court of India reiterated a principle similar to Chevron’s first step: if there is no ambiguity or scope for two interpretations in a statute, the courts should apply the plain meaning. In India, when ambiguity exists, different approaches are applied, such as harmonious and contextual construction. In cases of ambiguity in penal and taxing statutes, the rule of lenity is applied, favouring the interpretation that benefits the accused or the assessee.

In CIT v. Ram Kishan Das[v], the Supreme Court of India emphasized that when the legislature amends a statute, courts should consider the general scope, former state of the law, and the intent behind the amendment to determine whether it was introduced for clarification or to remove ambiguity. Furthermore, the Indian judiciary’s cautious approach towards conserving its independence is reflected in Union of India v. R. Gandhi, President, Madras Bar Association[vi], where the Court stressed that courts must independently assess statutory meaning to prevent executive overreach. This case emphasized that courts, not executive bodies, are the final arbiters of legal questions, maintaining a balance of power between the judiciary and the executive. This approach closely mirrors the concerns of the SCOTUS in overturning Chevron.

End Notes

[i] No. 22-451, 45 F. 4th 359 & No. 22-1219, 62 F. 4th 621 (2024), dated: 28.06.2024.

[ii] 467 U.S. 837 (1984).

[iii] The APA is a US federal statute enacted in 1946 that governs the processes by which federal agencies develop and enforce regulations.

[iv] (2021) 6 SCC 693.

[v] (2019) 15 SCC 554.

[vi] (2010) 11 SCC 1.

Authored by Srishty Jaura, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinions.