The Supreme Court Significantly Undercuts Agency Authority By Overruling Chevron in Landmark Ruling

July 1, 2024

On June 28th, the Supreme Court issued its decision in Loper Bright Enterprises v. Raimondo (Loper Bright) and Relentless, Inc. v. Department of Commerce (Relentless), overruling its own 1984 decision in Chevron v. Natural Resources Defense Council (Chevron). Cited in over 18,000 published cases, Chevron is considered one of the foundational cases in agency law because it created the doctrine of Chevron deference, which requires judges to defer to a federal agency’s interpretation of an ambiguous statute if it is reasonable. In overturning Chevron, the Supreme Court held that the deference given to agencies under Chevron is incompatible with the Administrative Procedure Act’s (APA) requirement that judges decide all relevant questions of law. While the Supreme Court stated that former cases that relied on Chevron would not be overturned, judges will make the ultimate decision on the correct interpretation of an ambiguous statute going forward.

What is the Chevron Doctrine?

The Chevron doctrine is a two-step test used by federal courts to determine the level of deference given to administrative actions. The first step requires the Court to ask whether Congress has clearly expressed its intent. If the Court determines that Congress has clearly spoken, the Court must defer to Congress’ interpretation. However, if the statute is ambiguous and the agency’s action is based on a reasonable interpretation of the statute, then the Court must defer to the agency’s interpretation of the statute.

Under this doctrine, courts have routinely deferred to federal agency interpretations of the law, creating a high bar for challengers seeking to oppose federal regulatory action.

What Cases Led to the Supreme Court’s Decision?

The two cases that led to the Supreme Court’s June 28th ruling involved fishermen who challenged the constitutionality of a National Marine Fisheries Service (NMFS) fisheries management rule developed under the Magnuson-Stevens Fishery Conservation and Management Act (MSA). The MSA grants the NMFS broad authority to create fisheries management plans and requires that vessels carry one or more observers to collect data necessary for the conservation and management of the fishery. Because Congressional funds available to NMFS were insufficient to cover expenses, NMFS required fishing vessels to pay the salaries of the observers.

What Happened at Oral Argument?

On January 17, 2024, the United States Supreme Court held oral argument on Relentless and Loper Bright to address whether the Court should overturn Chevron. Four Justices—Justice Alito, Justice Gorsuch, Justice Kavanaugh, and Justice Thomas—seemed prepared to overturn Chevron during oral argument, repeatedly questioning, among other things, whether Chevron impermissibly allows agencies, rather than courts, to interpret federal statutes. Justice Jackson, Justice Kagan, and Justice Sotomayor clearly appeared to favor maintaining Chevron, expressing concern that judges would become policymakers without Chevron and that the doctrine ensures proper deference is given to agencies that are experts in particular fields. Justice Barrett and Chief Justice Roberts held neutral viewpoints throughout the oral argument. While critical of Chevron, Justice Barrett expressed concern that overturning Chevron could lead to a flood of litigation. Chief Justice Roberts stated that there may be no practical need to overturn Chevron because the doctrine had been limited in prior Supreme Court decisions.

What did the Supreme Court Say About Chevron?

In the majority opinion, Chief Justice Roberts stated that Chevron “has proved to be fundamentally misguided” since its inception and that the only way for the court to ensure that the law would “develop in a principled and intelligible fashion” is for Courts to leave Chevron behind. He explained that Chevron was incompatible with the APA’s requirement that courts “decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action.” Further, Chevron had not been the sort of “stable background rule” that can be relied on given the Supreme Court’s “constant tinkering” with the doctrine and the doctrine’s inconsistent application by lower courts. Despite overruling Chevron, Chief Justice Roberts clarified that the decision would not apply retroactively to prior cases that relied on the Chevron framework. These cases, the Supreme Court held, were still subject to statutory stare decisis, and their mere reliance on Chevron does not create a “special justification” for overruling them. However, in the future and consistent with the 1944 Supreme Court case of Skidmore v. Swift & Co, an agency’s interpretation of a statute will only be one interpretation the court may consider in reaching a decision.

In a separately filed concurring opinion, Justice Thomas stated that the Chevron doctrine violated the Constitution’s doctrine of separation of powers by making judges “accept an agency’s interpretation of an ambiguous law” and preventing them from “exercising their independent judgment to resolve ambiguities.” Justice Gorsuch noted in his own concurring opinion that Chevron undermined a right to a fair trial and that discarding it would allow courts to “resolve cases and controversies without any systemic bias in the government’s favor.”

Justice Kagan’s dissenting opinion emphasized that the decision would “cause a massive shock to the legal system” and that the shifting views about the worth of regulatory actors did not “justify overhauling a cornerstone of administrative law.” Chevron, Justice Kagan explained, ensures that courts take a step back when they lack relevant expertise or experience and avoid “inserting themselves into an agency’s expertise-driven, policy-laden functions.”

Key Takeaways

The Supreme Court’s decision in Loper Bright and Relentless marks a considerable departure from four decades of Chevron deference. Federal rules developed pursuant to cornerstone pieces of legislation—such as the Endangered Specifies Act, Fair Labor Standards Act, Clean Air Act, Clean Water Act, Public Utility Regulatory Policies Act, Affordable Care Act, and the Inflation Reduction Act—are more likely to be overturned through legal challenge than before the June 28th ruling. The immediate effect of this ruling will undoubtedly be a rash of litigation challenging agency regulations, creating instability and potential inconsistency that will burden agencies and industry alike. Whether the long-term implications will lead to a more fair and stable regulatory environment benefitting the regulated communities remains to be seen.