Supreme Court Ends Judicial Deference to Agencies’ Regulatory Interpretation

For the past forty years, governmental agencies enjoyed a strong deference by the courts regarding challenges to their legal authority to develop and implement regulations. This deference made it difficult for the regulated community to challenge regulations in court in areas from the environment to employment to taxes.

On Friday, June 28, 2024, the Supreme Court released its much-anticipated opinion in a pair of related cases: Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce, overturning its 1984 decision in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. The decision charts a course away from more than four decades of administrative law precedent.

Chevron, decided in February 1984, constituted a victory for the Reagan administration’s Environmental Protection Agency (EPA) and introduced what became widely known as Chevron deference into both federal and state administrative law. In a 6-0 decision authored by Justice John Paul Stevens, the Supreme Court ruled courts should defer to agencies’ reasonable interpretation of their authorizing statutes.

The Chevron Court counseled that a reviewing court should determine if the agency’s interpretation of the statute is reasonable and, if so, should defer to the agency’s technical expertise. At the time, Chevron was not seen as particularly novel or even impactful.

In the more than four decades following the decision, however, federal and state courts have applied Chevron to make the deference given to agencies’ legal interpretations nearly as broad and impenetrable as the deference given to their scientific/factual findings. In the wake of Loper Bright and Relentless, however, this formerly ironclad discretion may now be significantly curtailed, opening the door to more legal challenges.

In Loper Bright/Relentless, the Supreme Court heard a fishing company’s challenge to a National Marine Fisheries Service (NMFS) rule requiring the herring fishing industry to fund federal monitors aboard their vessels fishing in the North Atlantic. 

Loper Bright Enterprises challenged the NMFS’s authority to enact this rule because the statute in question does not specifically state it applied to the herring fishing industry. Relying on Chevron, and providing NMFS deference in the drafting of the regulation, the U.S. District Court for the District of Columbia granted the NMFS’s motion for summary judgment, and the U.S. Court of Appeals for the District of Columbia Circuit affirmed. The Supreme Court, however, reversed, ruling that, by shifting too much authority to administrative agencies, the Chevron doctrine not only violated the Administrative Procedure Act but also separation of power principles.

In place of the Chevron doctrine, the Supreme Court instructs courts to “exercise their independent judgment in deciding whether an agency has acted within its statutory authority.” The full ramifications of Loper Bright/Relentless will likely take years to play out, but one thing is clear: this decision expressly removes a significant advantage that federal agencies previously enjoyed when defending challenges to their regulatory authority.  

Opponents argue that, because legislatures will be forced to legislate with greater specificity, the overturning of Chevron will exacerbate legislative gridlock and diminish effective regulation and lead to unintended policy outcomes. Proponents, on the other hand, argue that overruling Chevron will return important policy decisions to legislatures and the courts and reduce what some see as the longstanding tyranny of the so-called Administrative State.

One outcome of Loper Bright/Relentless, however, is evident: by abrogating Chevron deference and shifting power back to the courts, the Supreme Court is rebalancing the playing field and affording businesses greater opportunity to challenge what in the past may have been unassailable regulatory overreach.

The authors thank Woods Rogers Summer Associates Sara Burns and Ryan Weber for their co-authorship, research, and insightful contributions to this article.