Chevron Deference No More: The Future of Administrative Regulation Under Loper Bright
In a landmark opinion issued on June 28, 2024 in the combined cases Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce (hereinafter, “Loper Bright”), the Supreme Court of the United States (“SCOTUS”) overruled one of the most heavily cited cases in federal administrative law, restructuring a doctrine that has governed the interpretation of ambiguous regulatory statutes for 40 years. The 6-3 Loper Bright decision marks a fundamental shift in federal agencies’ ability to interpret the laws they administer and, coupled with SCOTUS’ July 1 decision in Corner Post, Inc. v. Board of Governors of the Federal Reserve System, ushers in the potential for a significant increase in litigation challenging actions taken by any number of federal agencies.
The Chevron Doctrine
In 1984, SCOTUS issued what has long been considered a landmark decision in Chevron v. Natural Resources Defense Council. The Chevron decision, which upheld the Reagan-era Environmental Protection Agency’s interpretation of the Clean Air Act, required courts to defer to federal agencies’ reasonable interpretation of ambiguous statutes within their administrative purview. Chevron dictated a two-part framework in reviewing an agency’s interpretation of a statute. First, the court reviewed the language of the statute at issue to determine whether Congressional intent was clear; if so, the agency was required to comply with the letter of the law. However, if the statute was ambiguous, courts were required to consider whether the federal agency’s interpretation of the statute as reflected in the challenged regulation was “reasonable.” If the court found the interpretation reasonable, the court was required to uphold the agency’s interpretation, even if the court felt that there was a better or more reasonable interpretation. The Chevron doctrine has had far-reaching impacts on federal administrative law, with the decision having been cited by federal courts more than 18,000 times.
The Impact of Loper Bright
Loper Bright marks a pivotal turning point in the regulatory landscape. After declining to take up previous challenges to Chevron deference in 2020 and 2022, the Court granted certiorari in the combined Loper Bright cases[1] to consider whether the Chevron doctrine “should be overruled or clarified.” Writing for the majority, Chief Justice Roberts[2] stated in no uncertain terms that “Chevron is overruled,” urging that Section 706 of the Administrative Procedure Act (“APA”) requires the judiciary to exercise its independent judgment in determining whether an agency has acted within its statutory authority and affords federal agencies no deference in interpreting the law, even if the statute at issue is ambiguous. (Op. at 35). Finding Chevron to be “fundamentally misguided” and “unworkable,” the majority opinion determined that stare decisis, the doctrine governing judicial adherence to precedent, weighed in favor not of maintaining adherence to Chevron, but of reversing it. (Op. at 29–30). The Court must refocus, Chief Justice Roberts urged, on the “question that matters: Does the statute authorize the challenged agency action?” (Op. at 29).
However, the majority opinion did not entirely discount agency interpretation in its ruling in Loper Bright. If a statute expressly delegates authority to an agency to act, courts must respect that delegation of authority while ensuring that such delegation is “consistent with constitutional limits” and that the agency acts within its bounds. (Op. at 35). Further, an agency’s interpretation of a statute in a challenged regulation may be persuasive in assisting a court in interpreting the statute’s meaning, particularly if such interpretation was issued concurrently with the statute and has “remained consistent over time.” (Op. at 16–17).
Justice Thomas, in a concurring opinion, wrote separately to urge that Chevron also violates the constitutional separation of powers, “curb[ing] the judicial power afforded to courts, and simultaneously expand[ing] agencies’ executive power beyond constitutional limits.” (Thomas, J., concurring, at 2). Justice Gorsuch also wrote a concurring opinion, articulating that the doctrine of stare decisis supports – rather than calls into question – the majority’s decision to overturn Chevron. Justice Gorsuch noted that “Chevron deference is inconsistent with the directions Congress gave us in the APA” and “represents a grave anomaly when viewed against the sweep of historic judicial practice. […] Stare decisis’s true lesson today is not that we are bound to respect Chevron’s ‘startling development,’ but bound to inter it.” (Gorsuch, J., concurring, at 33–34).
Writing for the dissent, Justice Kagan[3] urged that courts should not replace the agencies responsible for administering regulatory statutes in resolving ambiguities left open to an “implicit congressional delegation of interpretive authority,” emphasizing that federal agencies have scientific and technical expertise and a “detailed understanding of complex and interdependent regulatory programs” that courts do not. (Kagan, J., dissenting, at 2). Calling the overturning of Chevron a “jolt to the legal system,” Justice Kagan characterized the majority’s decision as a judicial power grab, noting that in “one fell swoop,” the Court had afforded itself “exclusive power over every open issue – no matter how expertise-driven or policy-laden – involving the meaning of regulatory law.” (Kagan, J., dissenting, at 3, 30)
While it remains to be seen just how quickly Loper Bright will impact the future of administrative law,[4] commentators largely tend to agree that federal courts are likely to see an uptick in challenges to agency rules and adjudications, with some fearing inconsistent rulings from the hundreds of federal judges across the nation. With over 430 departments, agencies and sub-agencies in the federal government, the impacts of SCOTUS’ decision in Loper Bright are sure to be far-reaching.
The Addition of Corner Post
In the weeks after Loper Bright was issued, SCOTUS did little to quell concerns that a rise in litigation challenging agencies’ statutory interpretations is on the horizon. On July 1, SCOTUS issued an opinion in Corner Post, Inc. v. Board of Governors of the Federal Reserve System,[5] determining when the six-year statute of limitations applicable to suits against the federal government begins to run on a claim brought under the APA. The statute of limitations at issue in Corner Post was 28 U.S.C. § 2401(a), which states that “every civil action commenced against the United States shall be barred unless the complaint is filed within six years after the right of action first accrues.”[6]
Accordingly, the Court was called upon to decide when a claim under the APA “accrues.” Writing for the 6-3 majority, Justice Barrett[7] called the answer “straightforward,” holding that “[a] claim accrues when the plaintiff has the right to assert it in court – and in the case of the APA, that is when the plaintiff is injured by final agency action.” (Op., at 1). The majority opinion reasoned that Section 702 of the APA “requires a litigant to show, at the outset of the case, that he is injured in fact by agency action” and, accordingly, “a litigant cannot bring an APA claim unless and until she suffers an injury.” (Op. at 4). Dismissing the Board of Governors’ position that an APA claim accrues when an agency action is final, Justice Barrett urged that a right of action only accrues “when the plaintiff has a ‘complete and present cause of action’ – i.e., when she has the right to ‘file suit and obtain relief’” which, in the majority’s view, does not occur until the plaintiff suffers an injury from the final agency action. (Op. at 5–6).
In issuing its ruling, the majority distinguished between statutes of limitations, which accrue based on the date of the plaintiff’s harm, and statutes of repose, which place an outside limit on challenges based on actions taken by the defendant (such as the entry of a final agency order). (Op. at 9–10). Statutes of repose, such as the Administrative Orders Review Act (also known as the Hobbs Act), are not impacted by the Corner Post ruling. Id. Accordingly, challengers of agency action must pay careful attention to the particular legal framework applicable to the agency rules at issue.
Writing for the dissent, Justice Jackson[8] characterized APA challenges as “facial administrative law claims” rather than plaintiff-specific or as-applied rights of action, urging that “in the administrative-law context, the limitations period begins not when a plaintiff is injured, but when a rule is finalized.” (Jackson, J., dissenting, at 6). Justice Jackson lamented that “there is effectively no longer any limitations period for lawsuits that challenge agency regulations on their face” and “[a]ny established government regulation about any issue – say, workplace safety, toxic waste, or consumer protection – can now be attacked by any new regulated entity within six years of the entity’s formation.” (Jackson, J. dissenting, at 2, 21). Combining Corner Post with SCOTUS’ Loper Bright ruling, she urged, could create a “tsunami of lawsuits” with “the potential to devastate the functioning of the Federal Government.” (Jackson, J., dissenting, at 23).
On the heels of Loper Bright, some commentators fear that Corner Post will magnify the effects of overruling Chevron, permitting parties to challenge decades-old regulations previously upheld as lawful. If Loper Bright opened the door to increased regulatory challenges, Corner Post has now enlarged the likelihood of successful facial challenges to any number of final actions[9] taken by hundreds of federal agencies. The future of administrative regulation post-Loper Bright and Corner Post will continue to evolve as regulated entities, administrative agencies and lawmakers work to address the impacts of these decisions.
[1] The combined cases concerned challenges to a regulation promulgated by the National Marine Fisheries Service, citing to the Magnuson-Stevens Fishery Conservation and Management Act of 1976, that required private fishing companies to pay for government observers to ride on their boats and collect data on federal fisheries. The Magnuson-Stevens Act authorized government observers to accompany private fishing companies on their vessels but was silent as to who is responsible for paying the observers’ fees. The lower courts, citing ambiguity in the Magnuson-Stevens Act, deferred to the National Marine Fisheries Service’s interpretation under Chevron.
[2] Chief Justice Roberts was joined by Justices Thomas, Alito, Gorsuch, Kavanaugh and Barrett.
[3] Justice Kagan was joined by Justice Sotomayor. Justice Jackson joined with respect to Relentless but was recused from Loper Bright because she briefly sat on the D.C. Circuit panel that considered it.
[4] Notably, however, the majority made clear that its decision in Loper Bright does not require that earlier cases that relied on Chevron be overturned “because to say a precedent relied on Chevron is, at best, ‘just an argument that the precedent was wrongly decided’” which, on its own, is not enough to overrule a prior decision. (Op. at 34–35).
[5] In Corner Post, a truck stop business that opened in North Dakota in 2018 filed a lawsuit in 2021 claiming that it had suffered financial harm from the Federal Reserve System’s 2011 adoption of the credit card fee structure in Regulation II.
[6] The dissent characterized Section 2401(a) as a “catchall” that “imposes an outer time limit on claims brought against the United States when no other statute of limitations applies.” (Jackson, J., dissenting, at 7).
[7] Justice Barrett’s majority opinion was joined by Chief Justice Roberts and Justices Thomas, Alito, Gorsuch and Kavanaugh.
[8] Justice Jackson’s dissenting opinion was joined by Justices Sotomayor and Kagan.
[9] SCOTUS’ ruling in Corner Post applies only to “final agency actions” reviewable under the APA. Less definitive agency tools, such as interpretive rules, opinion letters and policy statements, generally do not fall within this scope.