Monday, July 08, 2024

Farewell to Chevron Deference

One of the many controversial opinions coming from the Supreme Court at the end of its term was Loper Bright Enterprises v. Raimondo, No. 22-451 (6/28/24) which abolished what is known as Chevron deference. The commentators on the podcasts that I listen to were aghast that the Supreme Court felt that judges should hold themselves out to make difficult decisions as to clean air and water or whether to approve a prescription drug when there were agencies who had expertise in these areas.  Several commentators pointed out that it might not be a good idea to rely on federal judges to make scientific determinations after Justice Gorsuch confused nitrous oxide with nitrogen oxide in another case.  \

Be that as it may, my one exposure to Chevron deference was an argument in favor of Loper Bright. During Covid, Congress authorized the Paycheck Protection Act. Businesses could receive loans which would be forgivable if they met certain benchmarks such as keeping people employed. However, the SBA in making regulations for PPP loans concluded that companies in bankruptcy should be ineligible. There was nothing in the statutory text that said anything about excluding debtors in possession from receiving PPP loans. As a result, I filed suit after seeing a similar effort succeed in another Texas Court. I did not know what Chevron deference was before filing the adversary proceeding, but it was the death of my case. Trudy's Texas Star, Inc. v Carranza (In re Trudy's Texas Star, Inc.), 2020 Bankr. LEXIS 1729 (Bankr. W.D. Tex. 2020). 

At the time, I felt that it was silly that the SBA would be better situated than a bankruptcy judge to read a statute and decide whether it should apply to debtors-in-possession. In my opinion, the Administrator's interpretation was not reasonable. However, this interpretation caught on and debtors in bankruptcy lost a valuable source of liquidity. It is cases like this where agency expertise became agency lawmaking that inspired the Court's decision in Loper-Bright.  

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