On June 28, in a 6-3 decision, the Supreme Court in Loper Bright Enterprises, et al. v. Raimondo Secretary of Commerce, et al., held that federal courts must exercise independent judgment in deciding whether a federal agency has acted within its statutory authority. This decision upends 40 years of precedent set forth by the court’s prior finding in Chevron v. Natural Resources Defense Council (“Chevron”). 

Until now, it was well known that Chevron was the legal standard in administrative law for determining whether a federal agency, such as the United States Environmental Protection Agency, has exceeded its authority in interpreting its own statutes and implementing regulations. The court’s decision in Loper has sent shockwaves throughout the legal community and will certainly have immediate and widespread impacts for both federal agencies and the regulated community alike. However, before we can discuss what these impacts may be, it is important to understand what the Supreme Court’s holding in Chevron meant and how the court’s recent decision in Loper changes the judicial landscape.

Chevron stood for the proposition that when laws passed by Congress are ambiguous, lower courts must defer to the implementing federal agency’s interpretation of that statute. In other words, federal courts must yield to the executive branch’s interpretation of congressional statutes so long as its interpretations are reasonable. As a result, especially when Congress is divided, federal agencies have increasingly been required to pass regulations to implement an administration’s policy changes. Indeed, Chevron has been cited by federal courts in more than 18,000 opinions.

However, in writing for the majority in Loper, Chief Justice Roberts states that the Administrative Procedure Act (APA) “incorporates the traditional understanding of the judicial function, under which courts must exercise independent judgment in determining the meaning of statutory provisions.” In addition, Chevron “defies the command of the APA that ‘the reviewing court’—not the agency whose action it reviews—is to ‘decide all relevant questions of law’ and ‘interpret…statutory provisions,'” In other words, “[i]t requires a court to ignore, not follow, ‘the reading the court would have reached’ had it exercised its independent judgment as required by the APA….It demands that courts mechanically afford binding deference to agency interpretations, including those that have been inconsistent over time. Still worse, it forces courts to do so even when a pre-existing judicial precedent holds that the statute means something else—unless the prior court happened to also say that the statute is ‘unambiguous.’ That regime is the antithesis of the time-honored approach the APA prescribes.” Thus, “the deference that Chevron requires of courts reviewing agency action cannot be squared with the APA.”

Rather, Chief Justice Roberts concludes that the APA directs courts to “decide legal questions by applying their own judgment” and “makes clear that agency interpretations of statutes — like agency interpretations of the Constitution — are not entitled to deference.” Therefore, under the APA, “it thus remains the responsibility of the court to decide whether the law means what the agency says.”

The chief justice further notes that the idea that statutory ambiguities implicitly authorize federal agencies to resolve questions about their own powers is “misguided” because “[a]s Chevron itself noted, ambiguities may result from an inability on the part of Congress to squarely answer the question at hand, or from a failure to even ‘consider the question’ with the requisite precision.

In neither case does an ambiguity necessarily reflect a congressional intent that an agency, as opposed to a court, resolve the resulting interpretive question.”

Moreover, Chief Justice Roberts states that courts “routinely confront statutory ambiguities in cases having nothing to do with Chevron” but “do not throw up their hands because ‘Congress’s instructions have’ supposedly ‘run out,’ leaving a statutory ‘gap.'” Instead, they “use every tool at their disposal to determine the best reading of the statute and resolve the ambiguity.” Even when these ambiguities involve technical or scientific questions that fall within an agency’s area of expertise, Chief Justice Roberts emphasizes that “Congress expects courts to handle technical statutory questions,” as courts also have the benefit of briefing from the parties and “friends of the court.”

As a result of the Supreme Court’s ruling in Loper, the question most people are now asking is: what impact will this decision have for federal agencies and the regulated community going forward? First, Chief Justice Roberts states that the court’s ruling in Loper is prospective in nature. In other words, absent specific justification, this ruling neither calls into question prior cases that relied on the Chevron doctrine nor applies to past agency regulations and actions. 

However, it remains to be seen what affects Loper will have for federal agencies and the regulated community in the long term. Proponents of the decision argue that it is a major step in preserving separation of powers and preventing agency overreach. Therefore, it is possible Congress will try to write more explicit instructions in its laws that lay out exactly how agencies will implement them in order to avoid any ambiguity. In other words, Congress must speak with specificity when it wants to give a federal agency authority to regulate on an issue of major national significance.

On the other hand, those who disagree with the court’s ruling argue that it will shift power away from Congress and the executive branch to the judiciary by opening up the floodgates to litigation. Rather, federal agencies are better positioned to interpret their own implementing statutes and regulations because they are more likely to have the technical and scientific expertise to make such decisions. Thus, allowing federal judges, who may lack the requisite expertise, to decide such issues may lead to inconsistent results.