The June 28 decision by the U.S. Supreme Court to overturn the Chevron doctrine providing legal deference to federal agencies likely will generate more court challenges and slow certain regulatory initiatives, a leading aviation attorney said. Matt Mentzer, a partner who leads the tax practice for the aviation law firm Jetlaw, said he expects that courts will still weigh agency expertise in legal challenges. Even so, he added, the Supreme Court decision “has enormous implications for the aviation industry.”
The FAA told AIN that it was unsure how it would affect regulations or any potential legal challenges, and industry associations are watching closely for potential ramifications.
However, last week the House Transportation and Infrastructure Committee Republican leadership cited that Supreme Court opinion—the Loper Bright Enterprises v. Raimondo decision—in calling on the Department of Transportation and other agencies to provide a list of all relevant regulatory actions taken under the Biden Administration.
The Chevron doctrine came under a Supreme Court determination in the mid-1980s that called on courts to defer to a federal agency’s “reasonable interpretation” when laws were ambiguous or silent on an issue, Mentzer explained in an article he wrote for the law firm. The idea, he added, is that the agencies are the subject matter experts and Congress delegates authority to them to “fill in the gaps” of the statutes.
Chevron comes into play with more interpretative regulations, such as the FAA’s definition of beyond visual line of sight. “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,” he noted. And courts have almost always deferred to the agency’s interpretation.
In the Loper Bright opinion, Mentzer continued, the Supreme Court found that courts must exercise independent judgment in legal challenges to such regulatory action and not simply defer to an agency’s interpretation in ambiguous cases.
He added that JetLaw expects to see more legal challenges to all the agencies. He cited as an example the 1987 law directing the FAA to issue regulations to reduce aircraft noise over Grand Canyon National Park “to provide for natural quiet.”
In this case, the FAA adopted minimum altitudes, flight-free zones, and specific flight corridors, believing it met the standard. 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.”
Air tour operators and Native American tribes, along with environmental groups, challenged the interpretation with the former charging that the interpretation was overly broad and the latter not broad enough. The court applied the Chevron deference, finding that the FAA’s interpretation was reasonable.
Now courts would substitute their judgment. “Litigants and others affected by agency regulation may view Loper Bright as increasing their chance of success in challenging agency regulations,” he said, but cautioned, “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.”
A second major effect is that agencies may take longer and issue fewer regulations not explicitly authorized by statutes. Agencies must consider the litigation risks.
“I do think that all federal agencies will pull back from issuing purely interpretative regulations unless Congress has delegated that authority,” he told AIN. “For items like airworthiness directives, I would expect a court to give broad deference to the FAA’s technical expertise and the FAA’s mandate to ensure aircraft are safe and uphold ADs. However, for those regulations that are interpretative, such as the Grand Canyon flight restrictions, I would expect more challenges across the board.”
However, Mentzer does not believe that the decision would affect areas such as how the IRS conducts its audits on the use of business aircraft. He said these audits are expected to focus on how companies are imputing income for employee personal use of aircraft, as well as ensuring that they are disallowing entertainment expenses, ensuring that depreciation deductions are proper, and ensuring that they are compliant with federal excise tax obligations. These are all spelled out in the tax code.
Further, he noted that a tax court judge recently noted her intention to continue to give substantial weight to Treasury regions. “While I do expect more challenges from taxpayers, I also expect Treasury to continue to rely on previously issued regulations until a court determines that the regulation is invalid,” Mentzer said.
But he does expect numerous challenges to federal regulations. “The courts will inevitably tell us where the (new) boundaries to administrative regulations are.”