Supreme Court overturns Chevron doctrine

On June 28, 2024, in a decision taken by a vote of 6-3 in Loper Bright Enterprises v. RaimondoThe Supreme Court overturned Chevron doctrine, a decades-old precedent that has largely directed federal courts to defer to federal agencies’ interpretations of ambiguous statutes within their jurisdiction. The full implications of this decision deserve continued attention and preparation for the changed environment.

Washington can only begin to outline the implications of this decision. At the very least, the ruling signals a new era for the administrative state, marked by a limping executive branch, a strengthened judiciary, and a Congress that must now more clearly delegate any authority left to federal agencies. In the near future, the questions and uncertainties merit active attention to the anticipated outcome for plaintiffs and defendants, businesses, and advocacy groups. The decision will also prompt myriad legal challenges to existing and future federal regulations, including environmental, banking and financial services, health and safety, and labor laws that have been implemented for decades.

Both conservative and liberal justices acknowledged that their ruling upends the current structure of federal government policy. Supreme Court Justice John Roberts, writing for the conservative majority, pointed out that Chevron became “impractical”. He stated that Chevron rested on the erroneous assumption that agencies are best equipped to resolve complex issues of statutory interpretation in federal law. The majority, like him, held that courts have the ability to resolve statutory ambiguities. But Justice Elena Kagan, writing for the court’s three liberal justices, compared the majority of the court to an “administrative czar,” warning that the decision strips Congress and the executive branch of power in favor of the courts.

Over the past two decades, the Supreme Court has expanded the scope of its powers Chevron doctrine and hardened it, but also undermined its foundations. How pervasive and fundamental is the invalidation Chevron this will actually be resolved over decades of lawsuits unleashed by Loper Light.

Key aspects of the decision

This Loper Light decision does not actually say that a court should never defer to an agency’s statutory interpretation. Instead, it eliminates the previous doctrine, extrapolated from Chevronthat the court should Always to refer to the agency as long as the statute is ambiguous. As a result, at present the response to an agency’s interpretation or application of the statutory language will be a case-by-case decision, depending on the details of the statute and the question presented.

Many statutes give agencies express authority to interpret statutory terms. The Supreme Court cited several examples, such as a provision of the Fair Labor Standards Act that called on the Department of Labor to issue regulations clarifying who qualifies as an “employee.”

The key move that caused Chevron another assumption was that Congress would always covertly this delegates the authority to the agency to correct any statutory ambiguities in the statute administered by the agency. According to ChevronInstead of asking the court whether a statute granted the agency the authority it needed, the question was reversed. The assumption was that Congress intended agencies to interpret ambiguous terms unless the statute (usually expressly) indicated otherwise. This “implied delegation” is what Loper Light overturned. As explained by the Court in Loper Light“when the best interpretation of a statute is that it delegates discretion to an agency, the role of the reviewing court under the APA is, as always, to independently interpret the statute and carry out the will of Congress,” as expressed in current statute.

For decades, federal courts have operated under the consistent assumption that virtually every statute implemented by a regulatory agency involves a delegation of interpretive authority to that agency. Loper Lightthat assumption no longer holds. To assess how much weight a particular agency interpretation will carry in court, it is now necessary to know what authority that particular statute confers on the agency. Moreover, the Supreme Court has observed that the reviewing court “carries out the will of Congress subject to constitutional limitations.” What those limitations are and how they affect regulatory work throughout the administrative state will generate significant debate.

What is at risk and where are the opportunities

To be clear, every sector of government, business, and even consumer interests will review the decision and potentially find both risks and opportunities. Some of the most difficult issues to come will involve earlier regulatory decisions. The potential for massive disruption was clear even as the Supreme Court heard oral arguments, because decades of regulatory policy have been built on Chevron presumption.

Although the presumption has little effect in some situations — when the agency’s interpretation is roughly the same as what the court would have done or has done before, or when the delegation Congress gave the agency is clear — the doctrine requires the court to accept the agency’s interpretation even if the court has found that it is not the best interpretation of the statute.

What is noteworthy, according to Brand X 2005 decision, the court was supposed to do so, even if the court had previously issued the best interpretation and the agency had adopted something different. Such situations will generate the most tension.

The Supreme Court tried to limit the effects Loper Light on past decisions. In a short paragraph at the end of the majority opinion, it was announced that reliance on Chevron would not automatically mean that the prior court decision must be reversed. That would not decide the case. If nothing else, there are prior district court decisions that have expressed a serious tension between a given agency interpretation and the court’s view of the best interpretation. Many lower courts could reconsider those decisions. Furthermore, there are agency regulations that have never been challenged because, under Chevron regime, the challenges may have seemed unworthy. Those challenges may now be reconsidered.

As one example, the Treasury Department’s Office of Foreign Assets Control (OFAC), which implements sanctions imposed under the International Emergency Economic Powers Act (IEEPA) and the Global Magnitsky Act, among others, could be severely affected. Courts routinely invoke Chevron in reviewing (and almost always denying) appeals of OFAC decisions.

As one court recently wrote, “(a) review of an OFAC decision is unusually permissible because OFAC operates in an area that lies at the intersection of national security, foreign policy, and administrative law. Indeed, OFAC has the authority to Chevron deference in the interpretation of the IEEPA.” Again, this is just one example – policies related to artificial intelligence, student loan debt, environmental policy, and potentially even aspects of the Inflation Reduction Act – all of these issues could be among the broad issues that could be challenged in the wake of this decision.

The opportunities, challenges and uncertainties will continue to grow for a long time before the dust settles. Loper Light. In every interaction with the federal government, a fresh assessment of how much discretion the agency has must now be made. Chevronregardless of its advantages and disadvantages, made the answer to this question relatively simple. Loper LightHowever, it also opens the door for companies and industries to revisit and potentially challenge long-standing agency interpretations that were previously protected Chevron and otherwise seek to shape the agency’s future regulation more effectively, taking into account the invitation to do so that has been extended by Loper Lightand the benefits that may result from it.