US Supreme Court Rejects Chevron Doctrine – What You Need to Know

On June 28, 2024, the United States Supreme Court issued a landmark decision in Loper Bright Enterprises v. Raimondo,¹ reversing the judgment in Chevron USA v. National Resources Defense Council² and the federal judiciary’s forty-year practice of deferring to reasonable agency interpretations of ambiguous federal laws. In a 6-3 decision, Chief Justice Roberts wrote that the judiciary has the exclusive prerogative “to say what the law is.”³ Chevron’s collapse opens up new opportunities for regulated industries to challenge their regulators. At the same time, the Court has provided scant guidance to lower courts deciding agency rulemaking in a post-Chevron world. Loper thus poses both opportunities and threats to regulated industries and could create significant uncertainty in the near term.

Background: The Chevron Doctrine (1984)

The Administrative Procedure Act (APA) creates a private right of action to challenge actions of federal agencies.⁴ The APA, for example, authorizes courts to review and invalidate agency actions that are deemed “arbitrary,” “capricious,” or “in excess of statutory authority, powers, or limitations.”⁵ Final regulations issued by federal agencies through the standard notice-and-comment system are typically subject to judicial review under the APA. However, courts generally accord federal agencies a certain degree of deference when reviewing these regulations.

The most famous is the 1984 U.S. Supreme Court decision in Chevron USA v. National Resources Defense Council, which outlined a “two-part framework” for resolving problems involving an agency’s interpretation of the statute it administers.⁶ The test was deferential to administrative agencies. Under Chevron’s first step, the reviewing court must determine whether Congress “has directly spoken to the particular issue.”⁷ If Congress has done so, “that is the end of the matter; for the court, as well as the agency, must carry out the clearly expressed intent of Congress.”⁸ But “if the statute is silent or ambiguous as to a particular issue,” then the reviewing court goes on to ask “whether the agency’s response is based on a permissible interpretation of the statute.”⁹ In this second step, the court examines whether the agency adopted a “reasonable interpretation,” not whether the court would have adopted the same interpretation “absent the administrative interpretation.”¹⁰

Chevron relies on the legislative intent inference. The Supreme Court “assumed that Congress, when it left an ambiguity in a statute intended for agency implementation, understood that the ambiguity would be resolved, primarily, by the agency and intended the agency (not the courts) to have such discretion as the ambiguity permitted.”¹¹ This presumption is especially strong in the case of statutes in which Congress “has expressly left a loophole for the agency to fill.”¹² In such cases, “there is express authority for the agency to clarify a particular provision of the statute by means of a regulation, and any regulation providing it is binding in courts unless it is procedurally flawed, arbitrary or capricious in its substance, or manifestly inconsistent with the statute.”¹³

U.S. Supreme Court Loper Decision 2024

The Loper decision stems from two Chevron cases in the commercial fishing industry. Two groups of fishing companies challenged a National Marine Fisheries Service rule that required vessels operating in the Atlantic herring market to pay for a government-certified observer on their fishing trips. Applying Chevron, the district court in each case overturned the companies’ challenge to the observer rule and granted the government summary judgment.¹⁴ Panels of the U.S. Courts of Appeals for the D.C. Circuit and the First Circuit affirmed. The U.S. Supreme Court granted certiorari in both cases on the limited question of whether Chevron should be reversed or clarified.

The U.S. Supreme Court ruled that Chevron was overturned. Writing for a six-judge majority,¹⁵ Chief Justice Roberts held that the courts’ deference to the agency regulations issued under the Chevron ruling was inconsistent with the courts’ fundamental duty to interpret the law.

The traditional interpretative role of courts

The court began its analysis by emphasizing the traditional role of courts to “define what the law is.”¹⁶ According to the Court, “the creators of the Constitution () anticipated that the final “interpretation of the law” would be “the proper and special domain of the courts.”¹⁷ In exercising their traditional interpretive duty, courts have “granted due deference to executive branch interpretations of federal statutes,” especially in cases where “the executive branch’s interpretation was issued at about the same time as the statute’s enactment and has remained consistent over time.”¹⁸ However, respect and deference were not absolute and could not “replace” the judiciary’s duty to interpret the law.¹⁹

The court emphasized its conclusion by pointing to the New Deal era, when administrative rulemaking was expanded. Even there, the court explained, courts did not defer to agencies on questions of law. Instead, they applied the test set forth in the Supreme Court’s 1944 opinion in Skidmore v. Swift and Company.²⁰ Under the so-called Skidmore doctrine, a court may defer to an agency’s interpretation of the law based on “(1) the thoroughness of the considerations, (2) the soundness of the reasoning, (3) consistency with prior and subsequent decisions, and all factors that give it persuasive power if not controlling power.”²¹

Chevron ‘Cannot Reconcile’ with APA

The court also identified an irreconcilable conflict between the APA and Chevron. The APA’s provision on judicial review provides that courts “shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of agency terms.”²² Thus, consistent with the traditional interpretive role of the judiciary, the APA requires that courts exercise “independent judgment in determining the meaning of statutory provisions.”²³

The court expressly disagreed with Chevron’s “presumption” that “statutory ambiguities constitute implied delegations to the agency.”²⁴ “Ambiguousness,” the Court wrote, “is not simply a delegation of authority to interpret the law,” and courts “routinely confront statutory ambiguities in matters unrelated to Chevron.”²⁵ More fundamentally, “Chevron’s presumption is flawed because agencies have no special authority to resolve statutory ambiguities. Courts do.”²⁶

Chevron ‘undermines’ rule of law

In the closing sections of the opinion, the Court criticized Chevron’s “incoherent” and “impractical” framework. For example, the Court found that the “defining feature” of the Chevron doctrine “is the identification of statutory ambiguity,” but that “the concept of ambiguity has always eluded meaningful definition.”²⁷ In addition, the Court cited Chevron’s “continued tinkering with and ultimate turning away from Chevron” — the Court has not decided a single Chevron case since 2016 — as well as Chevron’s “inconsistent application of the law by lower courts.”²⁸ In the Court’s final analysis, “Chevron was a judicial invention that required judges to disregard their statutory duties. And the only way to ensure that the law does not simply change haphazardly but evolves in fundamental and understandable ways is to leave Chevron behind.”²⁹ Accordingly, the Supreme Court reversed the Chevron ruling.

What’s next

Loper represents a monumental shift in the roles of courts and executive agencies in interpreting and implementing federal law. While there are many unanswered questions, we expect the following immediate impacts:

Impact on other Chevron cases: Loper pointedly refused to challenge the thousands of decisions in which Chevron has ruled on federal regulatory challenges under the APA.^thirty These decisions remain in force (for now).

Surviving Skidmore’s Submission: Under Loper, courts must exercise their “independent judgment” when reviewing agency regulations. However, the Court left the Skidmore rule in place. Under this doctrine, courts may continue to rely on an agency’s interpretation of a statute if that interpretation has “persuasive force.”

A new form of respect for clear delegations of authority?: It’s unclear to what extent Loper will affect agency regulations issued under express congressional delegations of authority. The court explained that while it is the court’s duty to interpret federal statutes, the best interpretation of the statute “may be that the agency is authorized to exercise some degree of discretion.”³¹ In such cases, “the reviewing court’s role under the APA is, as always, to independently interpret the statute and carry out the will of Congress, subject to constitutional limitations.”³² Loper explained that courts exercise their “judicial function” in these cases by: (1) recognizing “constitutional delegations” of authority; (2) establishing the limits of the delegated authority; and (3) “ensuring that the agency has made reasoned decisions within those limits.”³³ The court did not, however, clarify whether this is a different test from the judiciary’s duty to “say what the law is” and, if so, when it should be applied.

Opens the door to challenges: We anticipate a significant increase in new lawsuits challenging agency regulations across a variety of sectors. However, it remains unclear how courts will apply Loper in the context of specific statutory schemes and without more specific guidance from the Supreme Court.

_{1 No. 22–451, 603 U.S. __ (2024). The Court’s decision was also issued in Loper’s sister case, Relentless, Inc. v. Dep’t of Commerce, No. 22–1219.
2,467 U.S. 837 (1984).
3 Loper, slip op. at p. 7 (quoting Marbury v. Madison, 1 Cranch 137, 177 (1803)).
4 5 USC § 701 et seq. The Administrative Procedure Act, enacted on June 11, 1946, is the statute governing administrative agencies in the United States.
5 Ibid. § 706.
6,467 US at 842–44.
7 Ibid., 842.
8 Ibid., pp. 842–43.
9 Ibid., 843.
10 Ibid., pp. 843–44.
11 Smiley v. Citibank (S.D.), N.A., 517 U.S. 735, 740–41 (1996).
12 Chevron, 467 U.S. at pp. 843–44.
13 United States v. Mead Corp., 533 U.S. 218, 227 (2001) (internal quotation marks and references omitted).
14 See generally Loper Bright Enters. v. Raimondo, 544 F. Supp. 3d 82 (DDC 2021), approved 45 F.4th 359 (DC Cir. 2022); Relentless Inc. v. United States DOC, 561 F. Supp. 3d 226 (DRI 2021), approved 62 F.4th 621 (1st Cir. 2023).
Fifteen Justices Thomas, Alito, Gorsuch, Kavanaugh, and Barrett joined the Chief Justice in the opinion. Justices Thomas and Gorsuch wrote a dissenting opinion, while Justice Kagan (joined by Justices Sotomayor and Jackson) issued a dissenting opinion. Justice Jackson participated only in the Relentless decision, having previously heard oral argument in Loper during her tenure on the D.C. Circuit.
16 Loper, slip op. p. 7 (quoting Marbury v. Madison, 1 Cranch 137, 177 (1803)).
17 Ibid. (quoting The Federalist No. 78, p. 525 (ed. J. Cooke 1961) (A. Hamilton).
18 Ibid., 8 o’clock.
19 Ibid., 9 a.m.
20,323 U.S. 134, 139-40 (1944).
21 Ibid., p. 140; see also Loper, slip. op. p. 10
22 5 United States Code § 706.
23 Loper, slip in 16th.
24 Ibid., 9 p.m.
25 Ibid., p. 22 (internal quotation marks and citations omitted).
26 Ibid., 23.
27 Ibid., 30 p.m.
28 Ibid., pp. 32–33.
29 Ibid., p. 34 (internal quotation marks and citations omitted).
30 See ibid., pp. 34–35.
31 Ibid., p. 17.
32 Ibid., 6 p.m.
33 Ibid., p. 18 (internal quotation marks and citations omitted).}

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_{This article has been prepared for the purpose of general information for interested persons. It is not, and does not attempt to be, exhaustive in nature. Due to the general nature of its content, it should not be considered legal advice.}