Key Takeaways:
- "Chevron is overruled." The Supreme Court today abandoned a forty-year-old precedent and held that courts may no longer defer to federal agencies' reasonable interpretations of ambiguous legislation. Instead, they "must exercise their independent judgment in deciding whether an agency has acted within its statutory authority."
- While the Court attempted to limit its holding to future reviews of agency actions, its decision likely will result in numerous challenges to already-established rules for which agencies or courts relied on Chevron to interpret vague legislation.
- The decision is limited to federal agencies. State agencies that enjoy Chevron-like deference under analogous state law principles will, for now, continue to do so.
- Loper/Relentless may not materially affect federal agencies' approach to rulemaking moving forward, as agencies have understood the Court to be skeptical of Chevron for some years now and have adapted accordingly. But in the long term, the decision likely hamstrings the federal government's ability to quickly address pressing and fast-changing issues, including climate change.
Four decades after the Supreme Court's foundational decision in Chevron v. Natural Resources Defense Council, the Court has abandoned the rule established in that case: that courts should defer to executive agencies' reasonable interpretations of ambiguous legislation. In a consolidated decision on two challenges to a rule issued by the National Marine Fisheries Service—Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce—the Court held that "Chevron is overruled. Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the [Administrative Procedure Act] requires." This landmark ruling could result in numerous further challenges to existing regulations and limit agencies' ability to issue new regulations.
In a 6-3 decision, Chief Justice Roberts wrote for the Court that "Chevron defies the command of the APA that 'the reviewing court'—not the agency whose action it reviews—is to 'decide all relevant questions of law' and 'interpret . . . statutory provisions.'" The Court nevertheless asserted that it does "not call into question prior cases that relied on the Chevron framework. The holdings of those cases that specific agency actions are lawful—including the Clean Air Act holding of Chevron itself—are still subject to statutory stare decisis despite our change in interpretive methodology."
Despite the Court's attempt to limit its holding, the Loper/Relentless decision likely will unleash a flurry of challenges to already-established rules for which agencies or courts, either explicitly or implicitly, relied on Chevron to interpret vague legislation. (Justice Kagan in her dissent predicted "large-scale disruption" as a result of the decision.) For example, in 2014, the Supreme Court itself cited Chevron in upholding an EPA rule setting emissions reduction standards under the Clean Air Act to limit the spread of air pollution across state borders. Republican lawmakers have put forth an agenda (subscription required) for a post-Chevron world that includes close scrutiny of rulemakings potentially subject to challenge in light of this shift in the law—with particular focus on environmental issues.
Still, it is important to note that Loper/Relentless only changes courts' procedural methodology for interpreting federal statutes moving forward. It does not have a substantive retroactive effect on previous adjudications, on which regulated entities can continue to rely. Further, the decision applies only to federal agencies: although states could adopt the same principles articulated in Loper/Relentless by analogy, they need not do so. Thus, where states' highest courts (like the Massachusetts Supreme Judicial Court) have adopted Chevron-like rules, state agencies will, for now, continue to enjoy deference in circumstances where federal agencies no longer will.
Even then, Loper/Relentless may not materially affect how federal agencies approach rulemaking moving forward. In theory, it could make agencies more cautious about pushing the limits of their authority. But agency caution has already been on the rise. The Court has been openly skeptical of Chevron for some time now. Thus, while Chevron has formally remained "on the books" until now, agencies have not cited the case in recent years and have taken a more textual approach to rulemaking, given the current Court. For instance, EPA has not relied on Chevron in issuing its many recent carbon and methane emission rules under the Clean Air Act. Still, Loper/Relentless will only further deter agencies from basing new regulations on novel interpretations of their governing statutes.
In the long term, this decision likely hamstrings the federal government's ability to quickly address pressing and fast-changing issues, including climate change, but also across the full scope of federal authority, such as with health or safety regulations. It will make agencies less nimble in enacting new regulations in response to new problems and information. Meanwhile, Congress remains as gridlocked as ever, so legislation is unlikely to fill the gap in the near future.
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