Supreme Court Update for Banking and Financial Services Professionals

by Charles W. Prueter, Waller

A young man from Chicago by the name of John Paul Stevens enlisted in the U.S. Navy on December 6, 1941. Pearl Harbor was attacked the next day, and he served the country throughout World War II. He returned home after the war to attend the Northwestern University School of Law. Then, after spending time in the private practice of law and in the government, he was appointed in 1975 by President Gerald Ford to the U.S. Supreme Court, where he would remain for the next 35 years. Justice Stevens passed away recently, at the age of 99. In his memory, the Update today discusses one of the most important and enduring opinions written by Justice Stevens while on the Court.

         Note: The Court is not currently in session and will not return until October. The Update will begin previewing cases for the October 2019 Term next month.

In 1984, Justice Stevens wrote the majority opinion in Chevron USA Inc. v. Natural Resources Defense Council, 468 U.S. 837 (1984), a seminal case in administrative law that continues to be applied frequently and dispositively in disputes involving businesses and individuals in a wide range of industries.

As readers of this publication know, the Schoolhouse Rock! version of how laws are made in this country — both chambers of Congress pass a bill, and the President signs it — is only part of the story. Vast swaths of our economy are governed not just by specific statutes passed by Congress and signed into law by the President but primarily by immense and complex regulatory schemes promulgated by the various executive agencies scattered across Washington, D.C. — the Department of Labor, the Department of Veterans Affairs, the Environmental Protection Agency, etc. But these agencies themselves are creatures of statute, and the statutes that give them the power to regulate particular areas of commerce or other activity do provide some general guidelines as to how the agencies should carry out their mandates. The agencies’ powers come into play when they expand upon and interpret those statutory guidelines.

For example, in 1984, the Clean Air Act imposed some environmental requirements on “stationary sources” of air pollution. The statute did not provide any further detail regarding the scope or meaning of the term “stationary sources,” so the EPA promulgated regulations to define the term and delineate the accompanying environmental responsibilities. These EPA regulations were challenged, and the challengers argued that the courts — in their roles as interpreters of the law — should have the final say on what the term “stationary sources” means, regardless of what the EPA says.

In this seminal opinion, which has resulted in what is known as “Chevron deference,” Justice Stevens explained that, first, a court considering the meaning of a regulation must determine whether Congress has directly spoken to the precise question at issue. “If the intent of Congress is clear, that is the end of the matter,” Justice Stevens wrote. In all circumstances, courts “must give effect to the unambiguously expressed intent of Congress.” But if Congress has not directly spoken to the issue, the court should not impose its own interpretation but should only consider whether the agency’s answer is based on a permissible, or reasonable, construction of the statute.

Accordingly, from then on, the rule was established that federal courts must defer to federal agencies’ interpretations of ambiguous or undefined statutory provisions. Jurists and academics have spilled much ink in criticizing and urging the abandonment of this doctrine. Among the most fundamental criticisms is that it runs afoul of the Separation of Powers by allowing the executive not only to enforce the laws (its traditional role) but also to make them (Congress’s purview) and interpret them (the Judiciary’s job).

Regardless, the doctrine has been an immensely important aspect of the way businesses operate and handle legal disputes, and Justice Stevens should be remembered for his effort to get it right and his efforts throughout his life to support and defend the Constitution. What more could we ask from a Justice?

If you are interested in reading more about Justice Stevens and the Supreme Court, I recommend his short memoir about serving as an Associate Justice under five different Chief Justices: Five Chiefs: A Supreme Court Memoir.


Charles W. Prueter is a trial and appellate lawyer at Waller Lansden Dortch & Davis, LLP, in Birmingham. He can be reached by email at