U.S. Supreme Court Rejects Chevron Decision, Transforming the Future of Regulatory Litigation | Insights

The United States Supreme Court has issued its long-awaited decision in Loper Bright v. Raimondo and Relentless v. Department of Commerce, two consolidated cases asking the Court to reverse its seminal decision in Chevron v. NRDC. As expected after oral argument, the Court accepted the invitation and overruled Chevron by a 6-3 decision. Under the new Loper Bright doctrine, the majority wrote: “Courts must exercise their independent judgment in deciding whether an agency acted within its statutory authority, as provided in the APA. [Administrative Procedure Act] requires.”

For more than 40 years, judicial review of agencies’ interpretations of statutes has been guided by the well-known two-step Chevron framework. First, courts were instructed to ask whether Congress “directly addressed the specific issue at issue.” If the answer to that question was no, then, in the second step, courts were required to uphold the agency’s decision unless the decision did not constitute a “reasonable” interpretation of the statute. As a result, because broad statutes are often subject to multiple reasonable interpretations, statutes frequently changed meaning from one administration to the next, and creative agencies were rarely stumped in their search for a broad statutory grant that would support a specific policy or policy objective. Over time, Chevron has been cited in more than 18,000 federal court decisions and relied on to uphold at least hundreds of agency actions. There is no doubt that behind the scenes, Chevron influenced the agencies' approach to countless other decisions.

In Loper Bright, the Supreme Court held that deference to Chevron was inconsistent with the APA and the courts’ primary duty to interpret laws enacted by Congress. In reaching this conclusion, the majority relied on the language of the APA, which grants federal courts the power to “decide all pertinent questions of law, to interpret constitutional and statutory provisions, and to determine the meaning or applicability of the terms of an agency’s action,” as well as pre-New Deal decisions emphasizing that agency decisions must be respected but not blindly followed.

The Court also held that the principle of stare decisis did not require continued adherence to Chevron. The Court held that Chevron was not only wrong but “fundamentally misguided” and had proven “unworkable” because, four decades into the Chevron experiment, the Court had still not arrived at a clear definition of ambiguity—or, as Justice Scalia put it in a law review article, “how clear is it?” Moreover, in complete disagreement with the dissent, the Court held that Chevron had not engendered substantial reliance because, almost since its inception, the Court had had to continually reshape Chevron through a series of patchworks and exceptions—Chevron “Step Zero,” the major questions doctrine, and so on. Rather than continue to cut back on Chevron's excesses, Loper Bright rejects the doctrine in its entirety.

Although Loper Bright marks the end of an era, it remains to be seen whether its impact will be progressive or revolutionary. Aware of the potential flood of lawsuits challenging past decisions relying on Chevron, the majority emphasized that “the holdings [in] cases where specific agency actions are legal…are still subject to statutory stare decisis despite our change in interpretive methodology,” and that “[m]Relying on Chevron is not a reason to overturn a precedent. At the same time, however, the Court noted that relying on Chevron in a prior decision may suggest that the precedent “was wrongly decided.” And, to the extent that such a decision did not consider the legal arguments in favor of the agency, it could also weaken the force of stare decisis. In addition to judicial precedent, agency decisions and other final actions that expressly or implicitly relied on the availability of Chevron deference will also be at issue.

Chevron’s demise doesn’t mean the end of deference, either. First, as the majority opinion recognizes, Congress can (subject to certain constitutional limitations such as the nondelegation doctrine) expressly delegate discretion to agencies. The decision in Loper Bright simply states that courts must no longer “pretend” that silence or ambiguity in the law constitutes such delegation. Furthermore, the Court describes its expertise only in the interpretation of laws; there remains substantial leeway, under the arbitrary and capricious standard, for agencies to apply deference in applying the law to new facts. During oral argument, for example, Judge Barrett gave the example of the difference between a drug and a supplement under the federal Food, Drug, and Cosmetic Act, suggesting that “the definition of a supplement food or drug might be a matter of statutory interpretation…but the category into which something falls might be a matter of policy for the agency.”

Predictions by some that the Chevron reversal would lead to the rapid demise of the regulatory state will likely prove overblown, but the decision will fundamentally change how Congress writes and how courts read laws — and it could also reshape agencies' internal decision-making.

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