In Overturning Chevron, Supreme Court Makes It Easier for Regulated Entities to Challenge Agencies on Statutory Interpretation

July 1, 2024
6 minutes

The Quick Takeaway: The Supreme Court’s decision in Loper Bright Enterprises v. Raimondo has overturned Chevron, a cornerstone of administrative law over the past 40 years. The longstanding Chevron doctrine required courts to defer to agencies’ construction of ambiguous statutes, even as to the scope of those agencies’ authorities, so long as the agency’s construction of the ambiguous statute was reasonable and thus a “permissible” one. Loper Bright strips agencies of this presumptive deference and invites new litigation over interpretations of statutory language that govern many areas of law and business. The decision also signals that more changes to administrative law may be on the horizon.

The Decision: On June 28, 2024, the Supreme Court issued a ruling in Loper Bright Enterprises v. Raimondo, No. 22-451, 2024 WL 3208360 (U.S. June 28, 2024) and a companion case, Relentless, Inc. v. Department of Commerce, No. 22-1219. In a major decision on federal agency power, the Court ruled 6-3, along ideological lines, to overturn Chevron v. National Resources Defense Council, 467 U.S. 837 (1984). The Court’s decision will significantly limit agencies’ powers of statutory interpretation and how much deference courts give those agency interpretations.

Statutes often contain both ambiguities in their language and gaps in their coverage. Some of these are purposeful; many are not. At base, Chevron and Loper Bright revolve around who gets to decide the meaning of statutes in light of those ambiguities – federal courts (who traditionally have had the say over the meaning of laws) or agencies (the organizations tasked with implementing these statutes). Loper Bright says that that power resides with the courts.

It’s difficult to overstate the impact of this decision because statutory ambiguities exist everywhere. Chief Justice Roberts’s opinion cites examples related to disability benefits for veterans, broadband internet services, coal mining, immigration, labor relations, and public utilities. Justice Kagan’s dissent features interpretations made by the Food and Drug Administration (“FDA”) (what qualifies as a “protein”?), the Fish and Wildlife Service (what is a “distinct population segment” of an endangered species?), the Department of Health and Human Services (“HHS”) (what defines a “geographic area” in adjustments to Medicare reimbursements?), and the Department of the Interior and Federal Aviation Administration (“FAA”) (what does it mean to “provide for substantial restoration of the natural quiet”?). There are also significant examples not touched upon in Loper Bright, such as determinations of whether a claim for payment from the government was “false” under the False Claims Act, or the Security and Exchange Commission’s interpretation of sections of the Dodd-Frank Act and the Investment Advisers Act of 1940. See, e.g., Nat'l Assn. of Private Fund Managers v. SEC, No. 23-60471 (5th Cir. argued Feb. 5, 2024).

Loper Bright itself concerns an interpretation of the Magnuson–Stevens Fishery Conservation and Management Act (“MSA”), a statute intended to provide for the management of marine fisheries in United States waters. Under the MSA, the National Marine Fisheries Service (“NMFS”) may require fishing vessels to “carry” federal monitors on board to enforce NMFS regulations and prevent overfishing. Amidst a decreasing budget in February 2020, the NMFS published a final rule establishing a standardized process that would require fishing vessels to pay for or partially subsidize these federal observers.

Loper Bright Enterprises, a herring fishing company operating in New England, filed a lawsuit in the United States District Court for the District of Columbia alleging that the MSA did not authorize the NMFS to mandate industry-funded monitoring of herring fisheries. The district court rejected that argument, and a divided panel of the U.S. Court of Appeals for the District of Columbia Circuit upheld the NMFS rule, finding it to be a reasonable interpretation of the MSA under Chevron.

The Supreme Court disagreed. Writing for the majority, Chief Justice Roberts reasserted the historic authority of the judiciary, stated most famously in Marbury v. Madison (1803), that it is the “province and duty of the judicial department to say what the law is.” Loper Bright, 2024 WL 3208360, at *9.

Relying on Section 10(c) of the Administrative Procedure Act (“APA”) as the definitive authority for this principle in the administrative law context, the Court emphasized that “the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action,” (emphasis added). Administrative Procedure Act § 10(c), 5 U.S.C. § 706. The majority reasoned that this directive from the APA cannot be squared with Chevron deference and its presumption that statutory ambiguities delegate to agencies the authority to determine what the statute says. The Chief Justice argued that courts—not agencies—have the expertise and legal judgment to resolve statutory ambiguities.

While the Chevron doctrine has been justified as providing a consistent presumption in favor of agencies resolving ambiguities, Chief Justice Roberts’s majority opinion points out that it has led to confusion. Because lower courts had difficulty interpreting Chevron, the Court has created a “byzantine set of preconditions and exceptions” to clarify the doctrine, resulting in further inconsistency. This was only compounded by the fact that agencies were free to change their interpretations—and therefore the governing rule—from one thing to its opposite, as long as both interpretations were “permissible.”

Finally, Chief Justice Roberts writes in the majority opinion that overruling Chevron does “not call into question prior cases that relied on the Chevron framework,” and that those cases would need “special justification” beyond mere reliance on Chevron in order to be overruled.

Practical Effects:

Loper Bright may further embolden litigants to challenge agencies’ adverse constructions of statutes. Certainly, commentators, practitioners, and some appellate courts already had noticed the Supreme Court’s move away from Chevron over the past eight years and so largely stopped relying upon it, which suggests that its reversal may have a more limited practical effect on legal questions that would have already been litigated at the appellate level.

That said, the express overruling of Chevron may still have significant impact on how lower courts address agency interpretations of their statutes. Although the Supreme Court has more recently ignored Chevron, the lower courts have continued in many instances to follow Chevron’s mandate. After Loper Bright, those lower courts can no longer apply Chevron, and will themselves need to grapple with the canons of statutory construction absent presumptive agency deference. Loper Bright is clear that there is an appropriate place for “respectful” consideration of the agency’s views in construing statutes. The majority notes that expertise has always been one of the factors which may give an agency’s interpretation “power to persuade,” but the decision today emphasizes that even then, it lacks “power to control.” Loper Bright, 2024 WL 3208360, at *10.

Notwithstanding Chief Justice Roberts’s reassurance that “special justification” is needed to revisit prior cases of agency interpretations, lower courts will likely see an uptick in challenges to both past and future agency statutory interpretation. As described above, agency interpretations extend across multiple areas of business and law, and the formal end of Chevron deference offers new ground for parties to challenge agencies’ interpretations on a more equal playing field that does not presumptively defer to the agency’s view. Absent Chevron deference, agencies will likely rely on Skidmore deference to argue that their interpretations are “entitled to respect” as a body of experience and informed judgment. But Skidmore deference is more limited than Chevron; under this lower form of deference, parties accused of violating statutory provisions in numerous contexts will now have a more level playing field in trying to persuade courts that their conduct comported with the best construction of the statutory provisions in question.

The Court’s full decision can be found here. We will closely follow how administrative agencies respond to this decision. Follow us for recent and related commentary on the effects of Loper Bright on specific sectors, including in Bloomberg Law and our podcast on SCOTUS and the Future of the Administrative State.