Perspectives: Destabilized but not yet deconstructed: OSHA implications of the recent Supreme Court term

The most recently completed term of the U.S. Supreme Court yielded three decisions with profound implications for the regulatory authority of federal agencies, including the U.S. Occupational Safety and Health Administration.

In its decisions addressing federally mandated monitors in fishing vessels in Loper Bright Enterprises v. Raimondo, civil fines imposed by the U.S. Securities and Exchange Commission in SEC v. Jarkesy, and payment network processing fees incurred by a truck stop in Corner Post Inc. v. Board of Governors of the Federal Reserve System, the High Court sent shockwaves that will reverberate through all federal agencies and the regulated community for years. While these decisions do not dismantle the administrative state, they have the potential to significantly reorder the foundations upon which the Department of Labor and other administrative agencies have operated.

Loper Bright

Loper Bright Enterprises v. Raimondo overruled the long-standing doctrine of Chevron deference established in the 1984 Supreme Court case Chevron U.S.A. Inc. v. Natural Resources Defense Council Inc. The court’s decision in Chevron began a 40-year run of federal courts having to defer to executive agencies’ interpretations of ambiguous terms in their statutes, so long as an agency’s interpretation was merely reasonable, not necessarily the best interpretation. That legal construct resulted in an agency-biased playing field in enforcement actions, but, more important, the exponential growth of regulations grounded in vague statutory language interpreted by agencies to grant broad authority to establish restrictions and obligations in vast aspects of business operations.

Some believe Loper Bright simply lifts the figurative agency thumb off the scale and resets the balance between the executive and judicial branches. Courts, not agencies, Loper Bright holds, must interpret the laws enacted by Congress. The Supreme Court says agencies have no particular expertise in this area of statutory interpretation — to the contrary, statutory interpretation falls within the unique province of the judicial branch. Federal court judges will afford no deference; litigants’ perspectives — both the challenging petitioners and the defending agencies — will be weighed equally, and the “best” interpretation of the statute, as determined by the reviewing court, will win the day.

As Chief Justice John Roberts wrote in the Loper Bright opinion: “In the business of statutory interpretation, if it is not the best, it is not permissible.”

Corner Post 

In a decision that may have a more profound impact in certain corners of the administrative state, the court held in Corner Post, Inc. v. Board of Governors of the Federal Reserve System that the six-year statute of limitations for suits against the United States under the Administrative Procedure Act does not begin until a party is injured by an agency’s regulation, and runs anew each time a new entity is injured by the regulations, rather than just once when the agency first takes the action.

Generally, a plaintiff’s claim that they suffered harm from a final agency action is subject to judicial review under Sec. 706(2) of the APA, which lets a reviewing court set aside a final agency action that is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” Now, plaintiffs who have not been affected by a federal agency’s regulation will still have a six-year window to bring an APA challenge once they are harmed.

Corner Post opens the door for new challenges to longstanding regulations. It also puts pressure on Congress to clarify or amend the APA if the volume of challenges becomes unmanageable.

For entities interacting with the Department of Labor, the impact of Corner Post depends on the specific statutory language governing the regulation. Ambiguous statutes could see increased litigation.

Jarkesy

Of the three cases, the one that has the most potential to disrupt DOL and other federal agencies is SEC v. Jarkesy, in which the court held that when the SEC imposes civil penalties against a defendant for securities fraud, the Seventh Amendment entitles the defendant to a jury trial, meaning that the SEC must bring such enforcement actions in federal court rather than before an administrative law judge. Under the antifraud provisions at issue, the SEC has historically had the option to pursue enforcement actions in federal court before a jury or through its administrative proceedings before an ALJ. The justices considered whether adjudicating these disputes in an administrative proceeding violated the Seventh Amendment’s guarantee that in “[s]uits at common law … the right of trial by jury shall be preserved.”

The court declared that common law actions “embrace all suits which are not in equity or admiralty.” This includes statutory claims that are “legal in nature.” Whether a claim is legal in nature, thus entitling the accused of a right to a jury trial in an Article III court, turns on:

1. whether the cause of action resembles a common law cause of action; and
2. whether the remedy is the sort that was traditionally obtained in a court of law.

The court stated that the nature of the remedy is the more important component of this analysis.

Noting that the SEC does not use civil penalties to compensate victims or restore the status quo but rather to punish and deter, the court characterized the monetary relief as “the prototypical common law remedy.” As a result, the court found that the suit implicated Seventh Amendment rights, so a defendant would be entitled to a jury trial on these claims. The justices determined that the SEC’s antifraud provisions also replicate historical common law fraud claims, supporting their conclusion that the matters belonged in an Article III court and not before an ALJ. Losing this forum to adjudicate enforcement would be a significant blow to litigants.

Looking Ahead

As these decisions ripple through the regulatory and judicial systems, agencies like the DOL will need to navigate a more uncertain legal environment. The potential for increased litigation and the need for more rigorous statutory interpretation will reshape how regulations are crafted, enforced and contested. The evolving landscape promises to be dynamic, and stakeholders should remain vigilant to adapt to these significant changes in administrative law.

Eric J. Conn is OSHA practice chair at Conn Maciel Carey LLP in Washington. He can be reached at [email protected].