In a 6-3 opinion authored by Chief Justice John Roberts, the Supreme Court overturned the Chevron doctrine that for 40 years required courts to defer, in large part, to reasonable federal agency interpretations of ambiguous statutes administered by those agencies. Loper Bright Enterprises v. Raimondo, No. 22-451 (U.S., June 28, 2024); Relentless Inc. v. Department of Commerce, No. 22-1219 (U.S., June 28, 2024). According to the majority, the decision in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), contravened the Constitution's allocation of powers and responsibilities among the three branches of the federal government and was contrary to Congress's dictates in the Administrative Procedure Act (APA). By overruling Chevron, the Loper Bright Court succeeded in orchestrating a significant shift of power from the executive branch to the judicial branch to interpret the meaning and contours of statutes enacted by Congress and implemented by the executive branch. On a practical scale, Loper Bright eliminates a key advantage federal agencies have had in litigation challenging agency rulemaking and regulatory actions.

Chevron Deference

In Chevron, the Supreme Court adopted a two-part test for judicial review of federal agency action. Step One required courts to discern whether Congress had directly spoken to the precise question at issue through its legislative text. If the intent of Congress was clear, Congress's intent was to prevail, and courts were to reject agency administrative constructions of statutes that that were contrary to congressional intent. In such instances, the issue was resolved at Step One. However, if a statute was ambiguous or silent on an issue, Step Two required that a court not impose its own construction of the statute but instead defer to the agency's interpretation if it was a "permissible" construction of the statute. As discussed at length in both the majority opinion and dissent in Loper Bright, Chevron deference rested on a presumption, the validity of which the justices disputed, that when Congress left ambiguity in a statute that an agency was charged to implement, Congress understood and intended that the ambiguity would be resolved by the agency in its discretion and given its subject matter expertise, and not by the courts.

"Chevron is Overruled"

In parting ways with Chevron, Chief Justice Roberts, joined by Justices Thomas, Alito, Gorsuch, Kavanaugh, and Barrett, drew a fine line between agency factfinding and interpretations of "questions of law" as to the meaning of a statute. The Chevron doctrine, which required judicial deference on the latter, conflicted with longstanding jurisprudence and the 1946 APA. Under the APA, courts are obliged to review agency factfinding under a deferential standard, but the APA provides no such deference to questions of law, leading the majority to conclude that it "remains the responsibility of the court to decide whether the law means what the agency says."

In Loper Bright, the Court acknowledged its long history of jurisprudence, including Skidmore v. Swift & Co., 323 U.S. 134 (1944), addressing courts' "respect" for executive branch interpretations of federal statutes, especially in matters that involve an agency's specialized expertise or when an agency's interpretation was the product of thorough consideration, was consistent over time, and was issued roughly contemporaneously with the enactment of the statute. Citing in part to the Federalist Papers and Marbury v. Madison, 1 Cranch 137 (1803), the Court emphasized that under Article III of the Constitution, it is the province and solemn duty of the courts "to say what the law is." In exercising independent judgment about the meaning of a statute, the majority explained that courts may, consistent with the APA and Skidmore, "seek aid from the interpretations of those responsible for implementing particular statutes."  

The Court also recognized that Congress can delegate discretionary authority to an agency to give meaning to a statutory term. The Court stated that, in such circumstances, the role of a reviewing court is to effectuate the will of Congress subject to constitutional limitations. That role is carried out consistent with the APA by "fixing the boundaries" of the delegated authority and ensuring the agency has engaged in reasoned decision-making within those boundaries. But the Court held that Chevron cannot be reconciled with the APA by presuming that statutory ambiguities are implicit delegations by Congress to agencies, especially given that "most statutory ambiguities may be unintentional" and agencies have "no special competence in resolving statutory ambiguities."

The ruling concludes:

Chevron is overruled. Courts must exercise their independent judgment in deciding whether an agency has acted within statutory authority, as the APA requires. Careful attention to the judgement of the Executive Branch may help inform that inquiry. 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. But courts need not and under the APA may not defer to an agency interpretation of the law simply because a statute is ambiguous.

Justice Thomas wrote a separate concurring opinion addressing how Chevron deference compromises the separation of powers by limiting judicial power the Constitution gives to the courts while simultaneously expanding agencies' executive powers beyond constitutional limits. Justice Gorsuch wrote a separate concurrence explaining "why the proper application of stare decisis" supports placing "a tombstone" on Chevron. 

Justice Kagan's dissent, joined by Justices Sotomayor and Jackson, relied heavily on a presumption of legislative intent from Congress, rejected by the majority, that "expert, experienced, and politically accountable" executive agencies would make rules about and otherwise implement statutes that are ambiguous or contain legislative gaps. The dissent highlights examples of typical, highly technical, and specialized "Chevron questions" from case law and concludes that Chevron was correct that between agencies and the courts, it is the agencies that are better suited to resolve these questions. After all, the decision is likely to involve the agency's subject-matter expertise, to fall within its sphere of regulatory experience, and to involve policy choices, including cost-benefit assessments and trade-offs between conflicting values.

Impact on ERISA Cases

The majority's opinion is not unexpected given how some of the current justices have treated the Chevron doctrine in prior cases and public statements and the tenor of the oral argument in January 2024. Roughly three months after the oral arguments in Loper Bright, the Department of Labor (DOL), represented by the Department of Justice (DOJ), anticipated the outcome of the decision. In a brief filed in the Fifth Circuit in a case challenging the validity of its regulation concerning fiduciary duties relating to environmental, social, and governance (ESG) investments, the government did not invoke Chevron. While the district court opinion in that case upheld the regulation under both the APA and Chevron, the DOL's appellate brief argued that its interpretation of ERISA was reasonable, but did not rely on Chevron deference. Instead, shortly after the Loper Bright decision was issued, the government wrote to the Fifth Circuit that it "agreed . . . that the Court should itself resolve the issue of statutory interpretation that this case presents." Enumerating guidance roughly contemporaneous with ERISA's enactment issued over three decades, the government argued that the consistency of the DOL's position on ESG investments and how they should be evaluated demonstrate the reasonableness of the regulation. It is possible that the Fifth Circuit may decide the issue; on the other hand, it could remand the question to the lower court. 

The district court challenges to the DOL's updated fiduciary rule are at early stages, with one being briefed by the parties. The DOL's position in that case, as in the ESG rule litigation, does not rely on Chevron, instead arguing that the "amended regulation reasonably applies ERISA's statutory language to current market realities," notably in contrast to the position in the ESG case. Litigation over regulations implementing the Affordable Care Act (ACA) and the Mental Health Parity and Addiction Equity Act (MHPAEA) may be also forthcoming in the wake of Loper Bright.

The impact of Loper Bright on federal courts and agencies, Congress, and parties challenging agency action cannot be underestimated. The opinion will surely give rise to an increase in legal challenges to agency regulations and administrative actions and in forum shopping by litigants wishing to get those cases before their desired judges and circuit courts. Federal agencies will lose the significant advantage in those cases that Chevron deference afforded them and they will likely take additional steps in issuing guidance and rulemaking to shore up the foundation and persuasiveness of their regulatory actions.

It will take years for the rebalancing of federal government power over the administrative state to fully take shape following Chevron's demise. Because district and appellate courts will exercise independent judgment when interpreting ambiguous legislation and undoubtedly will not see eye to eye on many issues, some laws federal agencies are charged to implement and enforce will be more unsettled for both regulated parties and those agencies. This uncertainty will create both burdens and opportunities for regulated parties. 

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