Supreme Court’s Chevron Overturn Will Impact the Aviation Industry

The U.S. Supreme Court's decision to overturn Chevron deference in Loper Bright Enterprises v. Raimondo has significant implications for the aviation industry. This article delves into the potential impacts on agency regulations, IRS and FAA requirements, and the pace of rulemaking.

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On June 28, 2024, the U.S. Supreme Court issued its opinion in Loper Bright Enterprises v. Raimondo, effectively eliminating what is known as Chevron deference. Chevron was a Supreme Court case that required courts to defer to a federal agency’s “reasonable interpretation” of a statute that the agency administers when the law was ambiguous or silent on an issue. Chevron deference presumed that the agencies were subject matter experts, and that Congress delegated authority to agencies – not the courts – to provide regulations to fill in the gaps in statutes.

The Two Types of Regulations: Legislative and Interpretive

There are two types of regulations, “legislative regulations” and “interpretative regulations.

Legislative Regulations

Legislative regulations arise from express authority given to the agency through legislation, such as the Federal Aviation Administration’s (“FAA”) ability to create minimum safety standards for aircraft operations and maintenance. These regulations are authoritative and difficult to overturn, as long as the regulations do not exceed the express authority embodied in the legislation.

Interpretive Regulations

Interpretative regulations, which come within the agency’s general authority to make rules and regulations, are more often ripe for challenge. An example of an interpretative regulation is the FAA’s guidance for model aircraft operations. The relevant statute defines a “model aircraft” as an unmanned aircraft that is capable of sustained flight, flown within visual line of sight of the operator, and flown for hobby purposes. The FAA has interpreted “visual line of sight” to mean actual sight and prohibits an operator from using binoculars or goggles that provide a “first-person view” of the aircraft. Under Chevron, if the court concluded that the statute was ambiguous (i.e. does “line of sight” mean actual sight or just able to be seen by the operator?), then the court must defer to the FAA’s interpretation of line of sight if the FAA’s interpretation is reasonable. In practice, courts almost always deferred to the agency’s interpretation.

The Loper Bright Holding

Loper Bright also states that an agency’s expertise remains one of the factors in determining if an agency’s interpretation of an ambiguous statue is persuasive or not.

Loper Bright overturned the Chevron deference, and the Supreme Court found that the Administrative Procedure Act (“APA”) requires the courts to exercise independent judgment in deciding legal questions that arise in reviewing agency action. In other words, a court may not defer to an agency’s interpretation of a statute simply because a statute is ambiguous.

However, Loper Bright still allows Congress to authorize agencies to promulgate regulations. In that instance, a court’s role is to ensure that the agency has shown “reasoned decision-making” in enacting regulations. Loper Bright also states that an agency’s expertise remains one of the factors in determining if an agency’s interpretation of an ambiguous statute is persuasive or not. Using our example above, the court (and not the FAA) would determine if the statute prohibits a model airplane operator from using binoculars to maintain “visual line of sight.” However, the court could still consider the agency’s expertise when deciding if the FAA’s interpretation of “visual line of sight” is persuasive.

Implications of the Loper Bright Decision

Loper Bright’s directive that courts should independently construe statues has enormous implications for the aviation industry. Loper Bright will have immediate implications for the FAA, the Department of Transportation (DOT), the National Transportation Safety Board (NTSB), the Transportation Security Administration, the Internal Revenue Service (IRS), Customs and Border Protection, Securities and Exchange Commission (“SEC”), and many other federal agencies.

The Expected Impact of Loper Bright on the Aviation Industry

Going forward, we expect Loper Bright to have the following impacts on the aviation industry:

  • More Challenges to Agency Regulations. We expect to see more legal challenges of DOT, FAA, IRS, and SEC regulations. As an example of Chevron deference, Congress passed a law in 1987 directing the FAA to issue regulations to reduce noise from aircraft flying over the Grand Canyon National Park “to provide for the natural quiet”.

In response, the FAA passed regulations approving flight restrictions to aircraft flying below 14,500 feet and established minimum altitudes, establishing flight free zones over the National Parks, four flight corridors through those zones, and specified flight routes. The FAA’s interpretation of the statute found that it would meet the requirement of “substantial reduction of noise” if the regulations provided “a substantial restoration of the quiet if 50% of the geographical area of the park achieved natural quiet for at least 75% of the day.”

The courts are now compelled to substitute their judgment for the judgment of the FAA in determining if regulations comply with an ambiguous statute.

A lawsuit was brought by both air tour operators challenging the FAA’s regulation was overly broad, and by Native American tribes and environmental groups that the regulation was not broad enough. Rather than determining which group was correct, the court, applying Chevron deference, found that the FAA’s regulation was a reasonable exercise of the FAA’s judgment and technical expertise in interpreting the ambiguous statute.

In a post Loper Bright world, rather than deferring to the FAA’s interpretation of a statute passed by Congress, the courts are now compelled to substitute their judgment for the judgment of the FAA in determining if regulations comply with an ambiguous statute. Would a court find that a “substantial reduction of noise” could be obtained by merely limiting the decibel level of aircraft over the Grand Canyon? How many hours per day must the park be quiet? Should certain types of aircraft be entirely restricted? Should there be a difference between Part 91 operators and commercial Part 135 operators?

Litigants and others affected by agency regulation may view Loper Bright as increasing their chance of success in challenging agency regulations. At the same time, this may affect more pilots, aircraft operators and owners, manufacturers, repair stations, FBOs, and others who struggle to determine how to comply with new regulations that may be challenged.

  • Less Ability for the IRS and FAA to Impose New Requirements. We expect to see the FAA and IRS authorize fewer restrictions or requirements that are not explicitly authorized by statute. Especially in reviewing interpretative regulations, the courts will be required to apply traditional techniques of statutory construction to arrive at their own independent interpretation of the underlying provisions of the statute rather than deferring to the agency’s judgment reflected in the regulation. In defending the regulation, the agency will have to demonstrate that the interpretation of the statute is objectively correct, not just one among several possible interpretations.
  • Slow and More Methodical Rulemaking: As the DOT, FAA, and IRS issue new regulations and guidance, those agencies will now have to consider the augmented litigation risk that Loper Bright creates. We expect this decision to further delay the Agencies’ rulemaking efforts, unless rulemaking is explicitly authorized or directed by Congress.
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