On June 28, 2024, the U.S. Supreme Court issued a decision in Loper Bright Enterprises v. Raimondo, and a companion case entitled Relentless, Inc. v. Raimondo, that upended a 40-year-old paradigm of judicial review of federal agencies’ interpretations of statutes that Congress entrusts them to administer. The Loper Bright Enterprises decision is poised to impact every industry and sector of the economy that is subject to or influenced by federal regulation and the actions of federal administrative agencies.

The “Chevron Doctrine”

In 1984, the Supreme Court decided Chevron v. Natural Resources Defense Council, 467 U.S. 837 (1984), in which it was tasked with determining whether an Environmental Protection Agency regulation was consistent with the term “stationary source” as used in the Clean Air Act. To make that determination, the Court established a two-step analysis for judicial review of federal agencies’ interpretations of statutes they are entrusted to administer. First, courts ask whether the plain language of the statutory provision under consideration resolves the interpretative issue. If the answer is “Yes,” then that plain language controls, and an agency interpretation at odds with that plain language will be rejected. However, if the answer is “No”—i.e., if the statutory provision is ambiguous in relevant respects—then the agency’s interpretation controls so long as it reflects a reasonable reading of the provision, even if, in the courts’ judgment, the agency’s reading does not reflect the provision’s best or most accurate reading, and even if the agency had recently changed its position and formerly endorsed another reading.

This two-step framework became known as the “Chevron doctrine.” In the ensuing 40 years, federal courts routinely applied Chevron when reviewing agencies’ statutory interpretations. In doing so, they regularly found statutory provisions ambiguous and deferred to agency interpretations, making “Chevron deference” the norm.

Loper Bright Enterprises: Overruling Chevron

The Loper Bright Enterprises case, in which the Supreme Court overruled Chevron, involved the U.S. Department of Commerce’s interpretation of the federal Magnuson-Stevens Fishery Conservation and Management Act. That statute requires fishery management plans to include “a mechanism for specifying annual catch limits . . . at a level such that overfishing does not occur,” and states that, to satisfy the requirement, a plan may require “one or more observers be carried on board.” The statute expressly identifies three groups that must cover costs associated with the onboard observers but does not specify whether Atlantic herring fishery operators are required to cover those costs.

In 2020, the Department of Commerce promulgated a federal regulation that created an industry funded program applicable to the Atlantic herring fishery: a fishery located in the northeastern part of the United States. The program is aimed to ensure onboard observer coverage on 50 percent of trips undertaken by certain vessels. Under the regulation, if the National Marine Fisheries Service determined that an observer is necessary for a vessel but declined to provide one at government expense, then the vessel—at its own expense—would be obligated to engage a government-certified third-party observer.

Vessel owners and other operators in the Atlantic herring fishery sued the Department of Commerce in the U.S. District Court for the District of the District of Columbia seeking to invalidate the regulation. They argued that the Magnuson-Stevens Act provision at issue does not authorize the Department of Commerce to require them to pay for third-party onboard observers. The district court rejected the challengers’ argument and the U.S. Court of Appeals for the District of Columbia Circuit affirmed. Both courts relied on the Chevron doctrine, finding that the Magnuson-Stevens Act did not plainly foreclose the Department of Commerce’s interpretation under which vessels may be required to pay for third-party onboard observers, and that even if the statute did not clearly compel that result, it was at least ambiguous on the question, and the Department of Commerce’s interpretation was reasonable.

The Supreme Court granted certiorari and, after full briefing and oral argument, reversed the D.C. Circuit’s ruling and expressly overruled Chevron. In a six-justice majority opinion written by Chief Justice Roberts, the Supreme Court stated that “Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority.” In other words, when a statutory provision is ambiguous, courts—not agencies—are responsible for determining what the provision means. The Court rested its decision on the Administrative Procedures Act, which provides that a court reviewing agency action “shall decide all relevant questions of law” and “interpret constitutional and statutory provisions”—commands that render “Chevron deference” inappropriate, the Supreme Court held. The Court noted, however, that consistent with the principle of stare decisis its ruling does not disturb prior rulings that had relied on Chevron.

Justice Thomas issued a concurring opinion in which he argued that Chevron deference is not only violative of the Administrative Procedures Act but unconstitutional and a violation of the separation-of-powers principle insofar as it prevents judges from exercising their independent judgment to resolve statutory ambiguities in cases where the ambiguity occurs in a statute administered by a federal agency. Justice Gorsuch issued a separate concurring opinion. And Justice Kagan authored a three-justice dissenting opinion for herself, Justice Sotomayor, and Justice Jackson.

Key Takeaways

Loper Bright Enterprises is a game-changer in the domains of federal regulation and litigation against the federal government. Here are some of the key takeaways, and areas to watch:

• With Chevron overruled, it will be more difficult for federal agencies to prevail in cases that hinge on questions of statutory interpretation where the language of the underlying statute is equivocal. Their statutory interpretations will no longer be accorded the controlling deference that Chevron had required.

• For that reason, expect to see a reduction in the phenomenon of administrative agency statutory interpretations changing from presidential administration to presidential administration—what the Supreme Court in Loper Bright Enterprises called “unwarranted instability in the law, leaving those attempting to plan around agency action in an eternal fog of uncertainty.” Now, a statute—even an ambiguous one—will be given its single best interpretation, as determined by the courts.

• When communicating with federal agencies and attempting to persuade them to adopt a particular interpretation of a statute they administer, parties must do more than rely on policy arguments. They must bring to bear the standard tools of statutory construction and show how the reading they advocate is consistent with text, structure, history, and other interpretative aids, because those are the criteria that courts will now use to review the agency’s interpretation.

• Although “Chevron deference” is gone, federal agencies’ statutory interpretations still will be entitled to a measure of “weight” under the Supreme Court’s ruling in Skidmore v. Swift & Co., 323 U.S. 134 (1944) in certain circumstances. The level of respect for an agency statutory interpretation accorded under Skidmore may depend upon factors like whether the agency adopted the interpretation contemporaneous with its enactment (rather than long after) and whether the agency has adhered to that interpretation over time (rather than changed positions).

The Loper Bright Enterprises decision is poised to have immediate effects on the federal judiciary and on federal agencies, themselves. Participants in every industry and sector of the economy that is subject to or influenced by federal regulation and the actions of federal administrative agencies should play close attention to see what develops.