SCOTUS Overruled the Chevron Doctrine, Now What?

The U.S. Supreme Court upended four decades of precedent when it recently issued its decision in two consolidated cases, Loper Bright Enterprises v. Raimondo and Relentless v. Department of Commerce. Now that the Court has abandoned the Chevron doctrine, federal courts may no longer defer to administrative agencies’ interpretations of ambiguous or broad statutes. The decision is not only expected to impact how regulatory challenges are decided by the courts but also how federal agencies draft future rulemaking.

Significance of the Chevron Decision

The Chevron doctrine is a bedrock of administrative law. Over the past 40 years, it has been cited in more than 18,000 court decisions and more than 3,000 administrative decisions, including countless regulatory interpretations by agencies such as the Securities and Exchange Commission, Environmental Protection Agency, and Federal Communications Commission.

In 1984, the Supreme Court’s decision in Chevron v. Natural Resources Defense Council required federal judges to defer to agencies’ “reasonable” legal interpretations of ambiguous laws in litigation over rulemaking. Under Chevron’s two-step analysis, a reviewing court must first assess “whether Congress has directly spoken to the precise question at issue.” If congressional intent is “clear,” that is the end of the inquiry. However, if the court determines that “the statute is silent or ambiguous with respect to the specific issue” at hand, the court must defer to the agency’s interpretation if it “is based on a permissible construction of the statute.”

The rationale behind Chevron deference was that Congress can’t possibly address every possible legal situation when drafting statutes, and that the federal agencies tasked with implementing them are best positioned to address gaps and ambiguities. However, the doctrine has come under fire in recent years for giving federal agencies too much power and, in doing so, eroding the roles of both the judiciary and Congress.

The Supreme Court’s Decision

On June 28, the Supreme Court expressly overruled Chevron by a vote of 6-3. It further held that courts must exercise their independent judgment in deciding whether a federal agency has acted within its statutory authority and may not defer to an agency’s interpretation of the law simply because a statute is ambiguous.

According to the Court, the deference the Chevron doctrine requires of courts reviewing federal agency actions can’t be squared with Article III of the Constitution and the Administrative Procedures Act (APA), which requires a reviewing court 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 Chief Justice John Roberts explained, the APA “makes clear that agency interpretations of statutes — like agency interpretations of the Constitution — are not entitled to deference.” Under the APA, it thus “remains the responsibility of the court to decide whether the law means what the agency says.”

In his opinion, the Chief Justice emphasized that Congress may still confer discretionary authority on federal agencies. In such cases, the job of the court is to “independently identify and respect such delegations of authority, police the outer statutory boundaries of those delegations, and ensure that agencies exercise their discretion consistent with the APA,” he wrote.

The Court also emphasized that courts may consider agency interpretations in conducting their own analysis. “Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the APA requires. Careful attention to the judgment of the Executive Branch may help inform that inquiry,” Chief Justice Roberts explained. “And when a particular statute delegates authority to an agency consistent with constitutional limits, courts must respect the delegation, while ensuring that the agency acts within it.”

The Supreme Court also made it clear that in overruling Chevron, it “[did] not call into question prior cases that relied on the Chevron framework.” Accordingly, the holdings of cases in which specific agency actions are lawful—including the Clean Air Act holding of Chevron itself—are still subject to statutory stare decisis despite the Court’s change in interpretive methodology.

The Future of EPA Regulations and Administrative Law

Chevron has been central to litigation challenging EPA regulations. While the impact of the Supreme Court’s decision will be significant, the full ramifications may not be realized for some time. Regulated entities and agencies alike will need to closely monitor how the lower courts address regulatory challenges under the new framework, which will require courts to independently determine the “best” statutory interpretation.

Allowing courts, rather than federal agencies, to resolve statutory ambiguities will likely make it easier to challenge federal regulations, particularly in cases where the agency has exceeded the scope of its delegated authority or strayed from statutory mandates. To avoid such challenges, Congress may need to be more explicit when drafting regulations given that federal agencies would no longer be able to fill in the blanks. When enacting rulemaking, federal agencies must also take greater pains to document how their rules accurately reflect the statutes that they are tasked with administering.

While the Supreme Court argued that the need for consistent construction of statutory law was not a reason to preserve Chevron, businesses could face uncertainty should courts across the country make diverging interpretations of the same statutes. At the same time, federal rulemakings are less likely to reflect the partisan policy priorities of regulatory bodies, which could provide greater stability from one administration to the next.

How Our Environmental Law Attorneys Can Help

The attorneys of Scarinci Hollenbeck’s Environmental Law Group will continue to monitor and report on legal developments in this area. Please contact one of our environmental law attorneys if you have questions concerning how Loper Bright could impact your organization.