In a major ruling on June 28, 2024, the United States Supreme Court overruled 40 years of precedent by rejecting what has been known as the Chevron doctrine, sharply cutting back the power of federal agencies in the process. In the landmark 1984 decision Chevron U.S.A. v. Natural Resources Defense Council, which gave rise to the Chevron doctrine, the Supreme Court instructed lower courts to defer to an administrative agency’s reasonable interpretation of an ambiguous statute, even if the court might conclude that there is a better, different interpretation. Under Chevron, judges were also required to take a deferential role when evaluating agency actions because judges lack an agency’s specialized knowledge and expertise. Although the Chevron case has been cited by federal courts more than 18,000 times in the decades following the ruling, the Supreme Court reversed course and held that Chevron had “proven to be fundamentally misguided” and “unworkable.”
Writing for a split 6-3 court in Loper Bright Enterprises v. Raimondo, Chief Justice Roberts stated that courts should instead rely on their own interpretation of ambiguous statutes. While noting that courts may be informed by an agency’s interpretation of a statute, the Court concluded that the Chevron doctrine was inconsistent with the Administrative Procedure Act and that it violated the general rule that courts should interpret the law. The Court also rejected the argument that agency expertise warrants judicial deference: “[E]ven when an ambiguity happens to implicate a technical matter, it does not follow that Congress has taken the power to authoritatively interpret the statute from the courts and given it to the agency. Congress expects courts to handle technical statutory questions.” The Court further held that courts must now exercise independent judgment in deciding whether an agency has acted within its statutory authority when providing guidance on statutory interpretation.
The majority cautioned that its decision should not be used to reverse prior cases absent a “special justification.” However, as the dissent pointed out, lowers courts can find “special justification” in almost any circumstance.
The Supreme Court’s holding in Loper Bright represents a watershed moment likely to recalibrate the balance of power between agencies and courts. For decades, Chevron deference has allowed agencies to redefine the statutes they enforce, and in some cases, expand the scope of those statutes with minimal judicial interference, including, for example, the Federal Trade Commission’s interpretation of the reach of the Telephone Consumer Protection Act and the Department of Labor’s rules regarding tip pooling and tip credits under the Fair Labor Standards Act. The Loper Bright decision may immediately affect the Federal Trade Commission’s recent rule that banned noncompete clauses in employer contracts, the Federal Communications Commission’s April 2024 decision to restore net neutrality rules for internet service providers, the Equal Employment Opportunity Commission’s decision to extend the Pregnant Workers Fairness Action to require accommodations for medical conditions related to abortions, and will likely impact the Environmental Protection Agency’s environmental regulations.
Organizations subject to federal regulation—which encompasses nearly every business operating in the United States—are likely to be impacted by the Court’s decision. Without Chevron deference, courts relying on traditional tools of statutory construction may more narrowly interpret the scope of permissible agency action. By giving courts more discretion to accept or reject an agency’s interpretation of various statutes, however, the Supreme Court has also opened the door for inconsistent rulings in various jurisdictions, creating a complicated web of rules for companies operating in multiple states.
To learn more about this new legislation, please contact the authors or your GRSM attorney.