South-Western Legal Studies in Business

Courts Must Defer to Reasonable Interpretation of Statutes by Agencies

Appeals court held that the Department of Labor had the right to change a regulation enforcing a 40-year-old statute so long as the interpretation was reasonable given the language of the statute and was supported by reasoned analysis.

Topic Administrative Law
Key Words

Regulation; Statutory Construction; Chevron Analysis

C A S E   S U M M A R Y

Congress passed the Labor-Management Reporting and Disclosure Act (LMRDA) in 1959 to prevent abuses on the part of labor organizations by requiring financial disclosure to the Department of Labor (DoL). The Act was always interpreted by DoL to require reporting only by unions that represent employees in the private sector. In 2002, DoL issued a rule expanding the reporting requirement to labor organizations that are part of a national or international union. This meant that most unions representing public-sector employees would now have to make annual financial disclosures to DoL. Numerous teachers unions contested the regulation. The district court held the regulation to be improper. DoL appealed.


Vacated and remanded. The DoL interpretation was entitled to judicial deference if based on permissible construction of the statute. Under the two-step Chevron analysis, courts reviewing agency interpretation of statutes first determine whether Congress has directly spoken to the precise question at issue. If the statute is silent or ambiguous on the issue, courts must defer to the agency's interpretation so long as it is based on a permissible construction of the statute. Congress did not specify a distinction between unions representing public-sector workers compared to private-sector workers. DoL is entitled to change how it interprets the statute on that issue, so long as it provides a reasoned analysis for the change in the regulatory standard that has been in place for several decades.


Alabama Education Assn. v. Chao, ---F.3d--- (2006 WL 2128974, D.C. Cir., 2006)

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