On June 28, 2024, the U.S. Supreme Court issued a landmark decision in Loper Bright Enterprises v. Raimondo,1 overturning Chevron USA v. National Resources Defense Council2 and the federal judiciary's forty-year-old practice of deferring to agencies' reasonable interpretations of ambiguous federal laws. In a 6-3 decision, Chief Justice Roberts wrote that the judiciary has the sole prerogative to "say what the law is."3 The demise of Chevron provides new avenues for regulated industries to challenge their regulators. At the same time, the Court offered scant guidance to lower courts deciding agency rulemaking challenges in a post-Chevron world. Loper thus presents both opportunities and risks for regulated industries and may cause significant uncertainty in the near term.
Background: The Chevron Doctrine (1984)
The Administrative Procedure Act (APA) establishes a private right of action to challenge federal agency action.4 The APA empowers courts, for example, to review and invalidate agency action found to be "arbitrary" or "capricious" or "in excess of statutory jurisdiction, authority, or limitations."5 Final regulations issued by federal agencies through standard notice-and-comment rulemaking are generally subject to judicial review under the APA. But in reviewing those regulations, courts have typically given federal agencies some degree of deference.
Most famously, in its 1984 decision, Chevron USA v. National Resources Defense Council, the U.S. Supreme Court set forth a "two-part framework" for resolving challenges to an agency's interpretation of a statute it administers.6 The test was deferential to administrative agencies. Under Chevron's first step, the reviewing court must determine if Congress has "directly spoken to the precise question at issue."7 If Congress has done so, "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."8 But "if the statute is silent or ambiguous with respect to the specific issue," then the reviewing court proceeds to ask "whether the agency's answer is based on a permissible construction of the statute."9 In this second step, the court's inquiry is whether the agency has adopted a "reasonable interpretation," not whether the court would have adopted the same interpretation "in the absence of administrative interpretation."10
Chevron rests on an inference of legislative intent. The Supreme Court had "presum[ed] that Congress, when it left ambiguity in a statute meant for implementation by an agency, understood that the ambiguity would be resolved, first and foremost, by the agency, and desired the agency (rather than the courts) to possess whatever degree of discretion the ambiguity allows."11 That presumption is especially strong for statutes where Congress has "explicitly left a gap for the agency to fill."12 In such cases, "there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation, and any ensuring regulation is binding in the courts unless procedurally defective, arbitrary or capricious in substance, or manifestly contrary to the statute."13
The U.S. Supreme Court’s 2024 Loper Decision
The Loper decision arises from two cases applying Chevron in the commercial-fishing industry. Two sets of fishing companies challenged a rule issued by the National Marine Fisheries Service which required vessels operating in the Atlantic herring market to pay for a government-certified observer during their fishing trips. Applying Chevron, the district court in each case rejected the companies' challenge to the observer rule and granted summary judgment to the government.14 Panels of the U.S. Courts of Appeals for the D.C. Circuit and First Circuit affirmed. The U.S. Supreme Court granted certiorari in both cases on the limited question of whether Chevron should be overruled or clarified.
The U.S. Supreme Court held that Chevron was overruled. Writing for the six-justice majority,15 Chief Justice Roberts reasoned that judicial deference to agency rulemaking under Chevron was incompatible with the courts' fundamental duty to interpret the law.
The Courts' Traditional Interpretative Role
The Court began its analysis by emphasizing courts' traditional role to "say what the law is."16 According to the Court, "[t]he Framers [] envisioned that the final 'interpretation of the laws' would be 'the proper and peculiar province of the courts.'"17 In executing their traditional interpretive duty, courts "accord[ed] due respect to Executive Branch interpretations of federal statutes," particularly where "an Executive Branch interpretation was issued roughly contemporaneously with enactment of the statute and remained consistent over time."18 But this deference and "respect" were not absolute and could "not supersede" the judiciary's duty to interpret the law.19
The Court underscored its conclusion by pointing to the New Deal-era of expanded administrative rulemaking. Even there, the Court explained, courts did not defer to agencies on questions of law. They instead applied the test set out in the Supreme Court's 1944 opinion in Skidmore v. Swift and Company.20 Under the so-called Skidmore doctrine, a court could defer to agency interpretations of the law depending on "[1] the thoroughness evident in its consideration, the [2] validity of its reasoning, [3] its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control."21
Chevron "Cannot Be Reconciled" with the APA
The Court also identified an irresolvable conflict between the APA and Chevron. The APA's judicial review provision states that courts "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."22 Thus, consistent with the judiciary's traditional interpretive role, the APA requires courts to exercise "independent judgment in determining the meaning of statutory provisions."23
The Court expressly disagreed with Chevron's "presum[ption]" that "statutory ambiguities are implicit delegations to agencies."24 "An ambiguity," wrote the Court, "is simply not a delegation of law-interpreting power," and courts "routinely confront statutory ambiguities in cases having nothing to do with Chevron."25 More fundamentally, "Chevron's presumption is misguided because agencies have no special competence in resolving statutory ambiguities. Courts do."26
Chevron "Undermines" the Rule of Law
In the concluding sections of the opinion, the Court criticized Chevron's "inconsistent" and "unworkable" framework. For instance, the Court reasoned that the "defining feature" of the Chevron doctrine "is the identification of statutory ambiguity" but "the concept of ambiguity has always evaded meaningful definition."27 Moreover, the Court cited its "constant tinkering with and eventual turn away from Chevron"—the Court had not decided a case under Chevron since 2016—as well as Chevron's "inconsistent application by the lower courts."28 In the Court's final analysis, "Chevron was a judicial invention that required judges to disregard their statutory duties. And the only way to ensure that the law will not merely change erratically, but will develop in a principled and intelligible fashion is for us to leave Chevron behind."29 Accordingly, the Supreme Court overruled Chevron.
What’s Next
Loper marks a monumental shift in the respective roles of courts and executive agencies in the interpretation and implementation of federal law. While there are many unanswered questions, we expect the following immediate impacts:
Effect on Other Chevron Cases: Loper expressly refused to call into question the thousands of decisions that have relied upon Chevron to adjudicate APA challenges to federal regulations.30 These decisions remain in place (for now).
Skidmore Deference Survives: Under Loper, courts must exercise their "independent judgment" in reviewing agency regulations. However, the Court left Skidmore deference in place. Under that doctrine, courts may still defer to an agency's interpretation of a statute if the interpretation has the "power to persuade."
A New Form of Deference for Express Delegations of Authority?: It is unclear the extent to which Loper will impact agency regulations promulgated pursuant to express delegations of authority by Congress. The Court explained that, while it is the court's duty to interpret federal statutes, the best reading of a statute "may well be that the agency is authorized to exercise a degree of discretion."31 In those cases, "the role of the reviewing court under the APA is, as always, to independently interpret the statute and effectuate the will of Congress subject to constitutional limits."32 Loper explained that courts fulfill their "judicial function" in these cases by: (1) recognizing "constitutional delegations" of authority; (2) fixing the boundaries of the delegated authority; and (3) "ensuring the agency has engaged in reasoned decisionmaking within those boundaries."33 The Court did not explain, however, if this is a different test than the judiciary's duty to "say what the law is," and if it is, when it should be applied.
Opens Door to Challenges: We anticipate a significant uptick in new lawsuits challenging agency regulations across sectors. It remains unclear, however, how courts will apply Loper in the context of particular statutory schemes and without more specific guidance from the Supreme Court.
1 No. 22–451, 603 U.S. __ (2024). The Court's decision was also issued in the Loper's sister case, Relentless, Inc. v. Dep't of Commerce, No. 22–1219.
2 467 U.S. 837 (1984).
3 Loper, slip op. at 7 (quoting Marbury v. Madison, 1 Cranch 137, 177 (1803)).
4 5 U.S.C. § 701 et seq. The Administrative Procedure Act was enacted June 11, 1946 and is the governing statute for the operation of administrative agencies in the United States.
5 Id. § 706.
6 467 U.S. at 842–44.
7 Id. at 842.
8 Id. at 842–43.
9 Id. at 843.
10 Id. at 843–44.
11 Smiley v. Citibank (S.D.), N.A., 517 U.S. 735, 740–41 (1996).
12 Chevron, 467 U.S. at 843–44.
13 United States v. Mead Corp., 533 U.S. 218, 227 (2001) (internal quotation marks and citations omitted).
14 See generally Loper Bright Enters. v. Raimondo, 544 F. Supp. 3d 82 (D.D.C. 2021), aff'd 45 F.4th 359 (D.C. Cir. 2022); Relentless Inc. v. United States DOC, 561 F. Supp. 3d 226 (D.R.I. 2021), aff'd 62 F.4th 621 (1st Cir. 2023).
15 Justices Thomas, Alito, Gorsuch, Kavanaugh, and Barrett jointed the Chief Justice's opinion. Justices Thomas and Gorsuch each wrote a concurrence, while Justice Kagan (joined by Justices Sotomayor and Jackson) issued a dissent. Justice Jackson participated only in the Relentless decision because she had previously heard oral argument in Loper during her tenure on the D.C. Circuit.
16 Loper, slip op. at 7 (quoting Marbury v. Madison, 1 Cranch 137, 177 (1803)).
17 Id. (quoting The Federalist No. 78, p. 525 (J. Cooke ed. 1961) (A. Hamilton).
18 Id. at 8.
19 Id. at 9.
20 323 U.S. 134, 139-40 (1944).
21 Id. at 140; see also Loper, slip. op. at 10
22 5 U.S.C. § 706.
23 Loper, slip op. at 16.
24 Id. at 21.
25 Id. at 22 (internal quotation marks and citation omitted).
26 Id. at 23.
27 Id. at 30.
28 Id. at 32–33.
29 Id. at 34 (internal quotation marks and citation omitted).
30 See id. at 34–35.
31 Id. at 17.
32 Id. at 18.
33 Id. at 18 (internal quotation marks and citation omitted).
