For the last 40 years, judges were required to defer to administrative agencies' reasonable interpretations of ambiguous federal statutes under Chevron v. Natural Resources Defense Council.
That ruling was recently changed in the recent U.S. Supreme Court case of Loper Bright Enters. v. Raimondo, which overturned Chevron and instructed judges to rely on their own judgment, rather than regulators, in determining whether an agency's regulation falls within its authority.
Chevron's repeal has both immediate and concrete impacts on ERISA's interpretations, as well as the potential for significant, broader effects.
For example, challengers of the Department of Labor's ESG Rule permitting fiduciaries to consider environmental, social, and governance factors when selecting plan investments have already pointed to Loper Bright to bolster their argument that the rule oversteps the DOL's authority and should be invalidated now that Chevron does not require deference to the DOL.
In that suit, currently on appeal in the U.S. Court of Appeals for the Fifth Circuit, a district court in the Northern District of Texas previously relied on Chevron in upholding the DOL's interpretation as reasonable. That decision may now be in question in light of the Loper Bright. "Where Does the End of Chevron Deference Leave ERISA?" www.lexology.com (Jul. 02, 2024).
Commentary
Until Chevron, ERISA litigants would often rely on administrative guidance from the Department of Labor, Department of Treasury, or the IRS to interpret ERISA and advocate for their positions.
Ironically, with agency deference ERISA litigation continued to climb. One would think it would decrease, but agency deference did not deter litigation.
Nevertheless, the Chevron decision is controversial.
The argument in favor of agency deference was that regulators where in a better position to provide expertise because they were in charge of the regulations.
The argument opposed was that allowing regulators higher deference undermined the Constitution, specifically the authority of the judicial branch whose purpose is a neutral arbitrator of disputes. Often the disputes were with the agency in question, which was the fact pattern in Chevron.
Chevron does not mean that judges cannot rely on the judgment of regulators or be informed by them…even educated on a matter. It simply means that the judgment of the regulators is not considered "better" than the judge or other experts that may differ with an agency.
For those responsible for benefit plan design and administration, hope is not lost because there are years of precedent, including published settlements and other losses to help make decisions.
Importantly, those responsible for benefit plan design and administration must work with legal counsel to stay on top of developing cases and work to reconcile conflicting court decisions around the country.