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Latham & Watkins Analysis of Supreme Court's Mead Decision Suggests Leveled Playing Field for Federal Agencies and Regulated Businesses in Administrative Law Cases

The law firm of Latham & Watkins has written an insightful analysis that concludes that the Supreme Court's recent decision in United States v. Mead Corp., 121 S.Ct. 2164 (2001), has dramatically restricted the judicial deference that courts must accord to federal agencies in determining the meaning of federal statutes. The Court's decision in Mead represents a significant break from the Chevron doctrine, under which courts were required to defer to agency interpretations of ambiguous statutory provisions, provided the agency's interpretation was reasonable (See Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984)).

The Mead Test

After Mead, heightened deference will only be permitted where an agency interpretation is incorporated in a rule created through notice and comment, an order coming out of formal adjudication, or some other "relatively formal" procedure through which Congress intended for the agency to speak with the "force of law." More specifically, the Mead Court laid out the following two-part test for when Chevron deference would still be appropriate:

  • Congress has delegated to an agency the general authority to make rules carrying the force of law; and
  • The agency interpretation for which deference is sought was promulgated in exercise of that authority.

In all other cases, a federal agency's interpretation will only receive deference if the court finds the agency's interpretation persuasive.

Conclusions

  • The Mead case puts the courts squarely back in the role of determining what the law means.

  • Mead is anticipated to level the playing field between federal agencies and private parties in most administrative law cases, and it is likely to open many more agency actions to successful court challenges.

  • However, additional time will be required to clarify exactly which agency actions will and will not be accorded Chevron deference.
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