On June 28, 2024, the Supreme Court overturned Chevron deference in a 6-3 decision in Loper Bright Enterprises v. Raimondo, Case No. 22-452. As a result, courts will no longer need to defer to an agency’s interpretation of a statute in challenges to agency actions and must instead “exercise their independent judgment in deciding whether an agency has acted with its statutory authority.” For businesses challenging agency actions, the end of Chevron deference means courts may be more likely to overturn agency actions and regulations that push the bounds of an agency’s statutory authority, and, in turn, agencies may begin to take a more conservative regulatory approach.

Brief Background

In a 1984 case involving statutory interpretation of the Clean Air Act, the Supreme Court invented Chevron deference—a two-step test for reviewing an agency’s interpretation of statutory language. Under step one, the court will decide whether the meaning of the statutory language is clear under a plain reading. If it is, then the court need not defer to the agency’s interpretation. If it is not clear what Congress meant under a plain reading of the statute, the court will proceed to step two, wherein it defers to the agency’s interpretation of that statute.

In Loper Bright, the Supreme Court considered two consolidated appeals, one from the D.C. Circuit and one from the First Circuit, regarding the National Marine Fisheries Service’s (NMFS) interpretation of the Magnuson-Stevens Fishery Conservation and Management Act (MSA). The D.C. Circuit upheld the NMFS’s interpretation of the provision of the MSA at issue, finding it was “reasonable” under step two of Chevron. The First Circuit similarly concluded NMFS’s interpretation did not exceed the bounds of the agency’s authority, but “declined to decide whether the result was a product of Chevron step one or step two.” The plaintiffs in both cases appealed to the Supreme Court, which took up the question of whether Chevron deference “should be overruled or clarified.”

The Supreme Court’s Decision

Chief Justice Roberts wrote the majority opinion. First, the Court found Chevron deference is at odds with the courts’ Constitutional mandate to interpret the law. Second, the Court considered the language of Section 706 of the Administrative Procedure Act (APA), which directs reviewing courts to “decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action” and to “hold unlawful and set aside agency action, findings, and conclusions found to be . . . not in accordance with law.” 5 U.S.C. § 706. The Court found Section 706 codified the idea that “courts decide legal questions by applying their own judgment” and, as a result, does not require deference to agency interpretations. Finally, the Court found stare decisis does not require upholding Chevron deference because the two-step test is “unworkable,” inconsistently applied in the lower courts, and “undermine[s]” the “rule of law.” As a result, the judgments of the D.C. Circuit and the First Circuit were vacated and remanded.

Implications of Loper Bright

The direct implication of the Supreme Court’s ruling is that courts are no longer required to defer to an agency’s statutory interpretation. Rather, courts will “decide legal questions by applying their own judgment” using traditional tools of statutory interpretation. In practice, this means challenges to agency actions involving statutory interpretation may be more successful in the future since there is no longer a presumption favoring the agency’s interpretation.

This shift to the courts will also mean similar cases brought in different circuits could result in diverging opinions on the limits of agency authority and the meaning of a particular statute. Therefore, businesses operating in multiple states or regions across the U.S. will need to be diligent in tracking regulatory cases nationwide. Similarly, where multiple venues for litigation are available, careful consideration of the available options is critical.

Loper Bright may also change how agencies draft their regulations. Without any guarantee of agency deference for statutory interpretation, agencies may trend toward a more conservative approach to avoid being overturned by the courts. Similarly, changes in Presidential administrations will be less likely to directly influence statutory interpretation through agency appointment. On the other hand, Presidential judicial appointments will continue to shape review of agency actions.

Finally, there are several important limitations of Loper Bright. First, cases already decided using the Chevron doctrine cannot be overturned solely on that basis. Second, Loper Bright does not directly overturn other ways in which courts defer to agencies. For example, courts may continue to treat agency technical analyses with deference, and the decision does not directly address Auer deference, in which courts may defer to an agency’s interpretation of its own regulations. Skidmore deference, which allows the court to treat agency interpretations, rulings, and opinions as persuasive (but does not require full deference), is preserved by the Court. Regardless, Loper Bright’s reading of the APA opens the door for courts to reconsider how and when agencies are owed deference in these different contexts.