On June 28, the Supreme Court abrogated the Chevron^[1] doctrine that has guided courts’ review of agency actions for the past 40 years. Chevron mandated that courts defer to an agency’s reasonable interpretation of an ambiguous statute.^[2] Although Chevron was inconsistently applied, it had significant impacts on outcomes in court. Some scholars estimate that agencies prevailed at least 25% more often when courts analyzed agency action under Chevron.^[3] Agency success increased dramatically at Chevron “step two,” once a court found the statute ambiguous; at that point, agencies prevailed over 90% of the time.^[4] Step two is really the meat of Chevron. Step one, which considers whether a statute is ambiguous, already directed courts to “reject administrative constructions which are contrary to clear congressional intent.”^[5]

In this summer’s Loper Bright Enterprises v. Raimondo decision, the Court overruled Chevron, ruling that its two-step framework that required deference to agencies’ interpretation of ambiguous statutes was contrary to the Administrative Procedure Act (APA) and the constitutional structure of the courts’ function.^[6]

Loper Bright had challenged a National Marine Fisheries Service (NMFS) rule that required fishing vessels pay a daily fee for observers who ensure fisheries restrictions are followed. The statute in question, the Magnuson-Stevens Fishery Conservation and Management Act, authorized imposition of these fees in three circumstances that did not include the Atlantic herring fishery.^[7] NMFS issued a rule in 2020 to impose fees there. Both the D.C. and First Circuit Courts of Appeal relied on Chevron to affirm the rule. Although the Supreme Court conducted a brief overview of the facts regarding the fee, its holding was expressly limited to whether Chevron should be overruled. To that end, the Court did not construe the Magnuson Act, and instead remanded that analysis to the lower courts.

The Court primarily relied on the APA, which empowers courts to decide “all relevant questions of law arising on review of agency action.”^[8] It characterized the purpose of the APA as a “check” on potentially overzealous administrators.^[9] The Court also examined the historic role of courts in interpreting statutes. Referring to the seminal case of Marbury v. Madison, the Court opined that it was well understood that courts decide the law. It concluded the APA “codifies for agency cases the unremarkable, yet elemental proposition reflected by judicial practice dating back to Marbury: that courts decide legal questions by applying their own judgment.”^[10]

Loper Bright does not create a new test; rather, it establishes that when courts analyze an agency’s interpretation of a statute, they must use the traditional methods of statutory construction. This generally requires an examination of the text and context of the statute, as well as Congressional intent and other relevant materials. Courts should still pay “careful attention to the judgement of the Executive Branch” but should not defer to its reasoning^.[11] This reclassification of the persuasiveness of an agency’s reasoning is akin to the existing doctrine of “Skidmore deference,”^[12] under which agencies’ “interpretations and opinions” on the meaning of an ambiguous statute may be persuasive, depending on the thoroughness of reasoning, strength of logic, and consistency in agency practice.

The Court acknowledged that prior decisions that rest on Chevron remain good law, though that does not mean that agency interpretations prior to June are on solid ground. This is magnified by the Court’s ruling in another case that also modify the impact of Loper Bright. In Corner Post, Inc. v. Board of Governors, 22–1008 (U.S. Jul. 1, 2024), the Court ruled that the six-year statute of limitations for challenging final agency action begins to accrue when the action injures a party, not when the action occurs. This means that when a rule applies to a person or business for the first time, they may challenge the rule in court, even if the agency action occurred more than six years ago. Such “as applied” challenges have long been available in the Ninth and D.C. Circuits, where much agency litigation occurs.^[13] Corner Post applies the principle nationwide.

Together, Loper Bright and Corner Post will likely result in numerous challenges to federal rules, perhaps even some that have been previously adjudicated.

How will Loper Bright affect the natural resources industry?

Chevron was a foundational environmental and natural resources case. Its impacts in the courts are clear, since agency interpretations were often accepted when Chevron applied. These cases had substantial impacts on how businesses operated. For example, in Babbitt v. Sweet Home Chapter of Communities for a Great Oregon, 515 U.S. 687, 115 S.Ct. 2407 (1995), the Supreme Court examined a challenge to a Fish and Wildlife Service rule that defined “take” under the Endangered Species Act. Although the common meaning of “take” did not extend as far, the rule included “habitat modification or destruction” as an element of take. The Sweet Home petitioners depended on forest products and argued the updated definition of take had harmed them by limiting logging in certain areas designated as wildlife habitat. The Court concluded that the statutory definition was ambiguous and acknowledged that petitioners offered strong arguments to support their contention that the rule was too broad. Nonetheless, relying on Chevron, the Court upheld the rule.

Loper Bright does not curtail all agency deference. First, as mentioned above, agency interpretations can still be persuasive, and likely will be given great weight.^[14] Second, agencies retain the ability to interpret their own regulations; an agency interpretation of its own ambiguous regulation will be upheld if it is “within the bounds of reasonable interpretation.”^[15] Third, when agency action is reviewed under the APA, matters within the agency’s expertise will receive a measure of deference under the statute’s “arbitrary and capricious” standard.^[16]

The Post-Loper Bright Landscape

Moving forward, we expect courts to revisit their dockets to determine whether the end of Chevron necessitates further briefing or reconsideration of pending case opinions. The Supreme Court telegraphed the need to revisit opinions after Loper Bright when it remanded nine cases to lower courts that had relied on Chevron. These cases alone could have significant impacts, and businesses should track them closely.

One case helps to illustrate the potential magnitude of Loper. In Foster v. USDA, 68 F.4th 372 (8th Cir. 2023), a family farm challenged the USDA’s certification of a small, shallow puddle as wetland.^[17] The family farm requested review under a USDA rule that allows impacted entities to challenge wetland certification. Relying on Chevron, the Eighth Circuit affirmed the rule and determined that the statutory provision at issue was ambiguous and deferred to the USDA interpretation.^[18] Under Loper Bright, the Eighth Circuit would have to determine whether the statute at issue provides for a broader right to challenge certain wetland classifications, as the family farm contended.

As courts revisit cases, Loper Bright provides an opportunity for businesses to reexamine their particular circumstances and determine whether a specific rule might have negative impacts that warrant a court challenge. It also provides a tool to push back on agency proposals that appear to expand beyond the scope of the agency’s statutory authority.

[1] Chevron , U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984); https://www.law.cornell.edu/supremecourt/text/467/837.
[2] Loper Bright Enterprises v. Raimondo, 603 U.S. ___, No. 22–451, (U.S. Jun. 28, 2024), slip op. at 19; https://www.supremecourt.gov/opinions/23pdf/22-451_7m58.pdf.
[3] See Kent Barnett and Christopher J. Walker, Chevron in the Circuit Courts, 116 Mich. L. REV. 1, 6 (2017).
[4] Id.
[5] Chevron, 467 U.S. at 843 n.9.
[6] Loper Bright, slip op. at 7–18
[7] Loper Bright, slip op. at 3.
[8] Loper Bright, slip op. at 14 (quoting 5 U.S.C. § 706) (emphasis the Court’s).
[9] Loper Bright, slip op. 13 (quoting United States v. Morton Salt Co., 338 U. S. 632, 644 (1950)).
[10] Loper Bright, slip op. at 14.
[11] Loper Bright, slip op. at 35.
[12] Loper Bright, slip op. at 10; Skidmore v. Swift & Co., 323 U. S. 134(1944).
[13] Wind River Min. Corp. v. United States, 946 F. 2d 710, 715 (9th Cir. 1991); Harris v. F.A.A., 353 F. 3d 1006, 1009–1010 (D.C. Cir. 2004);
[14] Loper Bright, slip op. at 10.
[15] Kisor v. Wilkie, 588 U.S. 558, 576 (2019) (citation and quotation marks omitted).
[16] 5 U.S.C. § 706(2)(A); see generally Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43(1983) (“Normally, an agency rule would be arbitrary and capricious if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.”); Kisor, 588 U.S. at 632 (Kavanaugh, J., concurring) (citing State Farm).
[17] 68 F.4th 372, 375–76.
[18] Id. at 377–78.