On June 28, 2024, the U.S. Supreme Court, in Loper Bright Enterprises v. Raimondo, overruled the long-standing “Chevron doctrine,” under which courts were required to defer to “permissible” agency interpretations of the statutes those agencies administer, even if a reviewing court reads the statute differently. The Supreme Court’s ruling sharply limits the power of federal agencies to interpret the laws they administer and emphasizes the duty of courts to interpret ambiguous or unclear laws.

The impact of the Supreme Court’s decision cannot be understated. Challenges to the validity of regulations will increase now that courts are no longer constrained by deferring to agency interpretation of statutes. We can expect regulations to be invalidated more frequently as a result. The Court’s decision is also a signal to Congress that legislation should be drafted in more detail to reduce the “gap-filing” that agencies typically have performed through rulemaking.

The Chevron doctrine required courts to employ a two-step framework to interpret statutes administered by federal agencies. First, courts must assess “whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.” Chevron, U.S.A., Inc. v. NRDC, Inc., 467 U.S. 837, 842-843 (1984). Second, if “the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute. . . Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.” Id. at 843. Chevron made it very difficult to successfully challenge a regulation in court.

In a 6-3 decision, written by Chief Justice Roberts, the Supreme Court overruled Chevron, holding that “Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the [Administrative Procedures Act (“APA”), 5 U.S.C. § 551 et seq.] requires.” The Supreme Court reasoned that, under the APA, “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.” 5 U.S.C. § 706. Thus, “Chevron turns the statutory scheme for judicial review of agency action upside down” and “cannot be reconciled with the APA[.]” While courts must respect the delegation of authority to agencies, consistent with the agency’s constitutional limits, “courts need not and under the APA may not defer to an agency interpretation of the law simply because a statute is ambiguous.”

In a concurring opinion, Justice Clarence Thomas wrote: “Chevron was thus a fundamental disruption of our separation of powers. It improperly strips courts of judicial power by simultaneously increasing the power of executive agencies.”

Three justices dissented, finding that the decision will have a major impact on agency work over the last 40 years and going forward, with Justice Elena Kagan writing: “Overruling Chevron, and thus raising new doubts about agency constructions of statutes, will be far more disruptive.”