U.S. Supreme Court Overrules Chevron, Reshaping the Future of Regulatory Litigation | Insights

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

For more than 40 years, judicial review of agency interpretation of statutes has been guided by Chevron’s familiar two-step framework. At the first step, courts were instructed to ask whether Congress has “directly spoken to the precise question at issue.” If the answer to that question was no, then at the second step courts were required to uphold the agency’s decision unless the decision was not a “reasonable” construction of the statute. As a result, because broad statutes are often susceptible to multiple reasonable interpretations, statutes frequently changed meaning from administration to administration, and creative agencies were rarely stumped in their search for a broad statutory grant that would support specific policy or political objectives. Over time, Chevron had been cited in over 18,000 federal court decisions and had been invoked to uphold at least hundreds of agency actions. No doubt, behind the scenes, Chevron has influenced agencies’ approaches to countless other decisions.

In Loper Bright, the Supreme Court held that Chevron deference is incompatible with the APA and with courts’ paramount duty to interpret the laws that Congress enacts. In reaching this conclusion, the majority relied on the language of the APA, which assigns to federal courts the authority to “decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action” as well as pre-New Deal decisions stressing that agency determinations are entitled to respect but not blind allegiance.

The Court also held that stare decisis did not require continued adherence to Chevron. The Court held that Chevron was not merely wrong but “fundamentally misguided” and that it has proven “unworkable” as, four decades into the Chevron experiment, the Court still had not arrived at a clear definition of ambiguity — or, as Justice Scalia put it in a law review article, “How clear is clear?” Further, in a point of stark disagreement with the dissent, the Court held that Chevron had not engendered substantial reliance because, almost since its inception, the Court has 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 chip away at Chevron’s excesses, Loper Bright throws the doctrine out in toto.

While Loper Bright signals the end of an era, whether its impact will be gradual or revolutionary remains to be seen. Mindful of the potential flood of lawsuits challenging old decisions that relied on Chevron, the majority stressed that “holdings [in] cases that specific agency actions are lawful … are still subject to statutory stare decisis despite our change in interpretative methodology,” and that “[m]ere reliance on Chevron” is not a reason for overruling a precedent. At the same time, however, the Court noted that a prior decision’s reliance on Chevron may suggest that the precedent “was wrongly decided.” And, insofar as such a decision failed to grapple with legal arguments in deference to the agency, that too could undermine the force of stare decisis. In addition to judicial precedents, also in question will be agency rulemakings and other final actions that relied expressly or implicitly on the availability of Chevron deference.

The death of Chevron also does not mean an end to deference. First, as the majority opinion recognizes, Congress may (subject to certain constitutional limitations such as the Non-Delegation Doctrine) expressly delegate discretionary authority to agencies. The decision in Loper Bright merely holds that courts should no longer “pretend” that statutory silence or ambiguity constitutes such a delegation. Further, the Court describes its expertise solely in the interpretation of laws; there remains substantial room under the arbitrary-and-capricious standard for agencies to apply their deference in the application of law to new facts. At oral argument, for example, Justice 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 dietary supplement or drug might be something that’s a question of statutory interpretation … but which category one thing fell in might be a question of policy for the agency.”

Predictions by some that overruling Chevron will lead to the swift demise of the regulatory state will likely prove overstated, but the decision will fundamentally change how Congress writes and how courts read statutes — and it may reshape internal agency decision-making as well.