TAKEAWAYS

• In 1984, the U.S. Supreme Court (SCOTUS) decided Chevron USA, Inc. v. National Resource Defense Council, reversing a lower court ruling that set aside EPA’s Clean Air Act “bubble policy” of providing regulatory relief from certain permitting requirements.
• SCOTUS granted certiorari in the Loper Bright and Relentless decisions to address whether Chevron should be overruled or clarified.
• On June 28, 2024, SCOTUS struck down Chevron, arguing that the decision was flawed because it ignored the Constitution’s mandate that the federal judiciary must decide all questions of law and violated one of the principal provisions of the Administrative Procedure Act (APA).

In 1984, the U.S. Supreme Court (SCOTUS) decided Chevron USA, Inc. v. National Resource Defense Council. See 467 U.S. 839 (1984). The unanimous decision, written by Justice Stevens, reversed then-D.C. Circuit Judge Ruth Bader Ginsburg’s ruling that set aside EPA’s Clean Air Act “bubble policy,” which was intended to provide regulatory relief from certain EPA permitting requirements.

Justice Stevens’ approach required the courts to defer to a reasonable and permissible agency interpretation of an ambiguous statutory provision that the agency was authorized to administer. He outlined a two-step framework which federal agencies and reviewing courts should employ to assess the agency’s interpretation: (a) Has Congress directly spoken to the precise question at issue? If it has, that is the end of the reviewing court’s inquiry. (b) However, if the court determines that the statute is silent or ambiguous, the court must defer to the agency’s interpretation of the law “if it is based on a permissible construction of the statute.” After a few years, it was recognized that the new Chevron “doctrine” had worked a revolution in administrative law and enhanced the power of federal agencies.

As a backdrop to the Chevron ruling, it should be noted that in the 1970s and 1980s, every presidential administration was deeply concerned with the fairness and efficiency of federal departments and agencies. The Officer of Management and Budget was often deployed to assert some control over the rulemaking and permitting process. In addition, in 1978 SCOTUS decided Vermont Yankee Nuclear Power Corp. v. NRDC, 435 US 519 (1978), which held that a federal court could not impose rulemaking procedures on a federal government agency. Historically, the D.C. Circuit had deeply involved itself in all sorts of federal agency proceedings, such as the Federal Communication Commission’s (FCC) routine approval of radio station program format changes. See FCC v. WGN Listeners Guild, 450 US 582 (1981). In some ways, the ruling in Chevron could be viewed as stepping away from those developments.

The question of what to do with Chevron was presented in two cases: Loper Bright Enterprises, v. Raimondo, a decision of the D.C. Circuit, and Relentless, Inc. v. Department of Commerce, from the First Circuit. The petitioners in both cases challenged a rule promulgated by the National Marine Fisheries Service, an agency of the Department of Commerce, which required some fishing vessels to carry and pay for the services of a third-party observer. The petitioners argued that nothing in the Magnuson-Stevens Act authorized the promulgation and implementation of this rule, but the D.C. and First Circuits utilized the Chevron framework to rule in favor of the government. SCOTUS granted certiorari in both cases to address whether Chevron should be overruled or clarified.

Chief Justice Roberts’ opinion for the majority, which prevailed on a 6 to 3 vote, held that the decision in Chevron was flawed because it ignored the Constitution’s mandate that the federal judiciary must decide all questions of law, and one of the principal provisions of the Administrative Procedure Act (APA), Section 706, which “delineates the basic contours of judicial review of agency action.” Also, Chevron’s justifying presumption is that Congress implicitly delegated this authority to the federal agencies, which the Court dismissed as a “fiction.” The Court also notes that it has not relied on Chevron as a basis for any ruling on an agency interpretation since 2016. Next, regarding the argument that stare decisis requires the Court to continue adhering to Chevron, the Court states that as it has evolved, Chevron is unworkable and often unpredictable and is already festooned with many exceptions and conditions. The Court intimates that the 1944 case which established “Skidmore respect” for the use of agency experience may survive the demise of Chevron deference. See Skidmore v, Swift & Company, 323 US 134 (1944). The Court also notes that the thousands of cases decided under the auspices of Chevron will not be disturbed; they will be entitled to “statutory stare decisis.”

A few days after SCOTUS overruled Chevron, it granted certiorari in several pending cases, vacated their judgments and remanded the cases to the appropriate federal appellate court for further proceedings based on the Loper Bright ruling. Illustrating the scope and breadth of Chevron, these cases were remanded to the Fourth, Fifth, Eighth and Eleventh Circuits, and the challenged rules had been issued by the Immigration and Naturalization Service, Department of Agriculture, Federal Energy Regulatory Commission, National Labor Relations Board, Federal Mine Safety and Health Commission, and Internal Revenue Service.

The Concurring Opinions
Justice Gorsuch discussed the proper role of stare decisis in the review of federal administrative law actions. Coincidentally, his mother, Anne Gorsuch, then serving as EPA Administrator, authorized the order at issue in Chevron in 1981. See 46 Fed. Reg. 50,766 (October 14, 1981).

Justice Gorsuch’s concurring opinion responded to the argument that the judicial doctrine of stare decisis protected the teaching of Chevron against reversal. He remarks that all the Loper Bright decision does is to require the Court to do “exactly what this Court has done since 2016, and exactly what it did before the mid-1980s.” As written and implemented, Justice Gorsuch writes that the Chevron ruling is inconsistent with the APA; it undermines “core” rule of law values; it has proven to be unworkable; and it has not served the interests of “ordinary Americans” who are not aligned with the federal government in these disputes.

In a separate concurrence, Justice Thomas argued that Chevron deference violated the constitution’s separation of powers.

Next Steps
Congress could amend the APA to codify Chevron v NRDC, or something like it, if it wants to. The APA has often been amended over the years, including some recent clarifying changes to the National Environmental Policy Act.

As noted above, SCOTUS returned several Chevron cases to the appellate courts to review their initial decisions in the wake of Loper Bright. Their decisions will be followed closely.

Meanwhile, the current presidential administration and its agencies have been busy promulgating new rules. At the halfway point in 2024, it has been reported that EPA has more than 100 new rulemakings underway or scheduled. The Spring 2024 Agency Agenda, which contains the regulatory agendas for 14 cabinet departments, 28 executive agencies and 15 independent regulatory agencies, has just been released. The demise of Chevron deference and the strengthened role of the federal judiciary will be a significant factor in these deliberations over the next few years.

The Impacts on Federal Administrative Law
We plan for this to be the first in a series of discussions on the impact of Loper Bright on the development and application of federal administrative law. We anticipate an in-depth review on the impact of this ruling on the score of federal agencies that participate in the development of the Federal Regulatory Agenda, which the federal government publishes twice a year. In addition, Loper Bright may have an impact on the Court’s “Auer Doctrine,” which governs an agency’s ability to interpret its own ambiguous regulations. The recent Kisor v. Wilkie decision which involved the Auer case may not be the last word on this matter. See 588 U.S. ----- (2019).

Finally, we will address the intersection between Loper Bright and SCOTUS’s July 1, 2024, decision in Corner Post, Inc. v. the Board of Governors of the Federal Reserve System, which held that the six-year statute of limitations that normally applies to federal rulemaking challenges does not begin to run until the plaintiff is injured by the final agency action.

The author thanks Sheila Harvey and Kevin Fong for their important contributions.

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