U.S. Supreme Court Strikes Down the Chevron Doctrine - What You Need To Know

By: Tyler Mlakar

Throughout the last few years, the United States Supreme Court (the “Court”) has shown a remarkable willingness to overrule its major precedents. Most recently, on June 28, 2024, the Court issued its decision in Loper Bright Enterprises v. Raimondo, officially overruling Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.—a decades-old jurisprudential bedrock of administrative law, and the engine powering the modern regulatory machine.

If that sounds like a big deal, it is. Administrative agencies are the “warp and woof” of contemporary American government. Whether it be the food that we eat (e.g., the Food and Drug Administration), the water that we drink (e.g., the Environmental Protection Agency), the money that we make (e.g., the Internal Revenue Service), or how and when we travel (e.g., the Federal Aviation Administration), there is an administrative agency and corresponding series of regulations governing every aspect of modern life; death too, for that matter. Administrative agencies and their rules are so extensive in present-day American society that a slight amendment to Benjamin Franklin’s adage is in order: “Nothing is certain except death, taxes, and regulation.”

Given the Administrative State’s size, scope, and critical importance, any decision affecting its powers, even slightly, is of special note. Accordingly, a decision upending those powers—i.e., the Court’s Loper Bright opinion—is paramount. Many have expressed grave concern with the sea change that the Loper Bright opinion portends. But with great change comes great opportunity. Following a brief background on Chevron and Loper Bright, we will discuss how, with the right legal counsel at your side, Loper Bright can become an asset for you and your business—not a liability.

A. What was Chevron?

Before you can understand the consequences of Loper Bright, you must understand what Chevron was and how it worked. Although Article I of the U.S. Constitution vests “All legislative Powers” in the legislative branch, throughout history, Congress has often “delegated” its lawmaking authority to administrative agencies through statutes. Such statutes (as with all laws), whether due to the inherent limits of human language and foresight, or even due to Congress’s deliberate obfuscation, are often not models of clarity. In the face of such ambiguity, the question becomes: who gets to interpret such ambiguities—the agencies Congress specifically entrusted with the statutes’ administration, or the courts, whose traditional “province and duty” is to say what the law is?

Chevron contemplated a two-step framework for resolving this question. First, if the statute at issue was “clear” courts were required to apply it as written. Second, if the statute at issue was ambiguous (statutory text involved in litigation almost always is), courts were to evaluate the agency’s interpretation of the statute and defer to that interpretation provided it was reasonable.

As a brief, hypothetical example, take the following. Congress determines that sandwich makers are not adequately protecting consumers, and the U.S. sandwich industry is in dire need of regulation. Congress passes the Sanford-Moskowitz Act (the “San-Witz Act”), creating the United States Sandwich Administration (“USSA”), and specifically delegates the authority to regulate all “sandwiches” to the USSA. Congress does not specifically define the term “sandwiches.” After a series of early wins regulating traditional peanut-butter-and-jelly producers, the USSA catches wind of a major scandal among streetside hotdog vendors. The USSA reviews the San-Witz Act, specifically the provision allowing it to regulate “sandwiches” and determines that the term “sandwiches” includes hotdogs. After all, Webster’s dictionary defines a sandwich as “two or more slices of bread or a split roll having a filling in between," and, technically at least, a hotdog meets that definition. Under Chevron, if the streetside hotdog vendors were to take the USSA to court, a court could determine that both (i) the definition of “sandwiches” is unclear and (ii) even though hotdogs do not exactly fit the definition, the USSA’s interpretation of “sandwiches” to include hotdogs is reasonable. If the court were to make those findings, Chevron required it to defer to the USSA’s interpretation, and the USSA’s power would extend to regulating not just traditional sandwiches but also hotdogs. This, even though many would vehemently dispute that a hotdog is, in fact, a sandwich.

B. What did the Court say in Loper Bright?

In Loper Bright, the Court explicitly overruled Chevron and held that courts must exercise independent judgment when interpreting a statute. According to the Court, agency interpretations—while under certain circumstances entitled to “respect”—are not entitled to deference, no matter how reasonable. In other words, agency interpretations may be persuasive, but they are nothing more than a single implement of many available to federal judges in their interpretive toolkit. And while a statute may and often does have multiple meanings, the Court explained that there is only one best meaning, and “[i]n the business of statutory interpretation, if it is not the best, it is not permissible.” Moving forward, courts—and courts alone—are to interpret ambiguous statutes.

C. What does all that legalese mean for my business?

While it will take many years for the full scope of Loper Bright’s consequences to come to light, there are at least a few ways that it could benefit you and your business with the right legal counsel at your side.

• Power to the People: Under Chevron, agencies had extraordinary latitude to interpret the nature and extent of their own powers. For regulated individuals and entities, this systematically biased decisions in favor of the government, and agencies knew it. Agencies had little incentive to work with regulated individuals and entities on new rules because agencies knew that the courts were likely to support the interpretation that the agencies proffered. Now, regulated individuals and entities have a substantial degree of leverage over agencies: the threat and use of litigation. Now that the government does not have a finger on the scale, agencies will be far more hesitant to incur the risk of litigation, and, concomitantly, far more likely to come to the bargaining table.
• Reduced Pendulum Effect: One of the consequences of Chevron was that, with each new Presidential administration, agencies could drastically re-interpret statutory provisions in ways that accorded more with the then-ruling administration’s policy preferences. The interpretation would often, perhaps not surprisingly, switch with each succeeding administration. For example, take Chevron itself. The Reagan Administration’s Environmental Protection Agency (“EPA”) interpreted the words “stationary source” in the Clean Air Act Amendments of 1977 in a way that was pro-business, pro-deregulation, and pro-economic growth—largely at the expense of rapid advancements in environmental policy. But, just years later, Chevron allowed the Clinton and Obama Administrations’ respective EPAs to interpret the words “stationary source” in exactly the opposite way: pro-environment, pro-regulation, and in a way that promoted the interest in rapid advancements in environmental policy over economic growth. Loper Bright may increase litigation on the front end, but once the “best” judicial interpretations of statutes are established, these interpretations will stand, unchanging with successive administrations. And, since you will be stuck with the judiciary’s interpretation of the statute, you want the best available legal counsel arguing what that “best” interpretation of the statute is on your behalf.
• Second Bite at the Apple: While the Court in Loper Bright stated that “we do not call into question prior cases that relied on the Chevron framework,” the Court reiterated that a “special justification” could nonetheless justify a court’s reevaluation of such cases. This means that if an agency issued a rule based on an extremely flawed interpretation of the statute pursuant to which the rule was promulgated, there may be grounds for you to challenge that rule now.
• It Might Not Be Too Late: Finally, if you are worried about potential statute-of-limitations issues, you might be in luck. Just days after the Court decided Loper Bright, it issued a decision in Corner Post, Inc. v. Board of Governors of Federal Reserve System. In Corner Post, among other things, the Court held that a plaintiff’s claim accrues “when the plaintiff is injured by final agency action” not when the challenged agency action becomes final. In other words, you may still have recourse against older rules you did not realize you had. This is a fact-intensive question and will require review of the specific circumstances underlying your case.

For regulated individuals and entities, the Court’s Loper Bright decision could be a godsend, or it could be a calamity. Only time—and litigation—will tell.