End of An Era: SCOTUS Overturns Chevron After 40 Years of Deference to Administrative Agencies

On June 28, 2024, the Supreme Court of the United States (SCOTUS) issued its decision in Loper Bright Enterprises v. Raimondo.¹ While the issue before SCOTUS involved whether the Department of Commerce could compel fishermen to bear the costs of on-board observers mandated under the Magnuson-Stevens Fishery Conservation and Management Act (the court determined it could not), the majority in its decision utilized the opportunity to drastically alter the way courts review agency actions. 

Along ideological lines, SCOTUS overturned Chevron USA v. Natural Resources Defense Council² in a 5–4 decision. Decided in 1984, the move reverses the long-standing precedent governing the degree of deference afforded to agencies by the courts in interpreting their legislative mandates such that going forward “courts need not and under the [Administrative Procedure Act] may not defer to an agency interpretation of the law simply because a statute is ambiguous.”³

By way of background, Chevron previously adopted a two-step analysis that formed the foundation of administrative law over the last several decades. Under this analysis, where statutory language was silent or ambiguous, the court would merely evaluate whether an agency’s interpretation was “based on a permissible construction of the statute.”  Assuming that was the case, courts were then instructed to defer to the agency’s interpretation rather than substituting their own interpretation of the law.

The logical underpinning of Chevron was that agencies were best situated to interpret statutes that have been delegated to them, predicated on their specialized knowledge and expertise that the courts, and Congress, often lack. However, critics of Chevron have long argued that the deference improperly erodes the judicial function, blurring the lines of the separation of powers as structured under the Constitution.

In overturning Chevron, SCOTUS determined that the deference that Chevron required of courts reviewing agency actions cannot be squared with the Administrative Procedures Act. It also found that Chevron’s underlying presumption that Congress, when it left ambiguity in a statute, meant for the ambiguity to be resolved by the agency charged with implementing the law rather than the courts was “misguided because agencies have no special competence in resolving statutory ambiguities.”⁵  Ultimately, “courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority[.]”⁶ In doing so, courts must pay “[c]areful attention to the judgment of the Executive Branch [which] may help inform that inquiry.”⁷ In this regard, where a statute “delegates authority to an agency consistent with constitutional limits, courts must respect the delegation, while ensuring that the agency acts within it.”⁸

As a consequence, administrative agencies have less margin for error in crafting regulatory schemes. The dissent highlighted this point in their opinion, finding that agencies will struggle to respond to new challenges with urgency. Although SCOTUS has steered away from Chevron in recent years, it was nonetheless relied upon by the lower federal courts across thousands of decisions. 

Finally, overturning Chevron also offers state courts the opportunity to reexamine their own administrative jurisprudence, many of whom often relied upon standards similar to those espoused under Chevron. Without a federal counterpart, state courts might begin to press their authority in evaluating agency actions as well. Ultimately, the landscape of administrative law will inevitably shift over the coming years as both the courts and agencies alike adapt to this new framework.

If you have any questions regarding the content of this alert, please contact Yvonne Hennessey, Environmental Practice Area Chair, at yhennessey@barclaydamon.com; Brenda Colella, Regulatory Practice Group leader and Regulatory Practice Area co-chair, at bcolella@barclaydamon.com; David Solimeno, associate, at dsolimeno@barclaydamon.com; or another member of the firm’s Regulatory Practice Area.

¹Loper Bright Enterprises et al. v. Gina Raimondo, Secretary of Commerce, et al., 603 U. S. ____ (2024) (S. Ct. June 28, 2024).
²Chevron USA Inc. v. Natural Resources Defense Council, Inc., 426 U.S. 837, 843 (1984).
³Loper Bright Enterprises, Slip Op. at p. 35.
⁴Chevron USA Inc. v. Natural Resources Defense Council, Inc., 426 U.S. 837, 843 (1984).
⁵Loper Bright Enterprises, Slip Op. at p. 23).
⁶Id.

⁷Id.
⁸Id.