US Supreme Court Overturns Chevron Deference Doctrine in Loper Bright Enterprises., Inc. v. Raimondo

On June 28, 2024, in a 6-3 decision, the United States Supreme Court overturned its opinion in Chevron, U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984). Under the Chevron framework, a court defers to agency interpretations of ambiguous statutes, as long as the judge finds the interpretation to be reasonable. The idea was that when Congress enacts broad regulatory mandates, agencies fill in the gaps, using their expertise to carry out what are reasonably deemed to be Congress’ intent. In its opinion in Loper Bright Enterprises., Inc. v. Raimondo (“Loper”), the Supreme Court has eliminated the latitude administrative agencies have had in interpreting statutes.

CHEVRON FRAMEWORK
The Chevron doctrine emerged from the landmark case Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) decided by the U.S. Supreme Court in 1984. The Supreme Court, in a majority opinion authored by Justice John Paul Stevens, upheld as reasonable a Reagan administration regulation that interpreted the Clean Air Act to allow the Environmental Protection Agency to define the term “stationary source” to mean whole industrial plants. The Chevron opinion created a deferential framework for courts to review agency interpretations of ambiguous statutes that the agency is charged with administering. Pursuant to Chevron, courts were instructed to conduct a two-part analysis:

• Courts must determine whether Congress has directly spoken to the precise question at issue. If the statute is clear, and Congress provided the agency the authority to act, the court must give effect to the unambiguous intent of Congress.
  
  
• If the statute is ambiguous or silent on the issue, the court defers to the agency's reasonable interpretation, as long as it is based on a “permissible construction” of the statute. Chevron, 467 U.S. at 843.

LOPER’S CHALLENGE TO CHEVRON
Loper pits the owners of a New England fishing company against a federal agency, the National Marine Fisheries Service (NMFS). The Magnuson-Stevens Act sets catch limits to help prevent overfishing and requires fishing boats to have a government-appointed inspector onboard to monitor compliance. Fishing companies incur the cost of these monitors—in plaintiff Loper Bright’s case, about $700 a day. However, the company argued NMFS has no authority to force it to incur this cost. A district court disagreed, reasoning that Congress left that question open for the agency to decide. Applying Chevron, the court deferred to NMFS’s choice that the boat owner should pay. A federal appeals court affirmed this decision. The plaintiffs then appealed to the Supreme Court.

The Supreme Court granted certiorari to decide one question: “Whether the Court should overrule Chevron or at least clarify that statutory silence concerning controversial powers expressly but narrowly granted elsewhere in the statute does not constitute an ambiguity requiring deference to the agency.”

THE COURT’S DECISION
In his majority opinion, Chief Justice John Roberts said Chevron "defies the command of" the law that governs federal administrative agencies, "that the reviewing court--not the agency whose action it reviews--is to decide all relevant questions of law and interpret ... statutory provisions." He added: "It requires a court to ignore, not follow, the reading the court would have reached had it exercised its independent judgment as required by the" law. After Loper, courts may not defer to an agency’s interpretation of a statute merely because the statute is ambiguous. A court must exercise independent judgment in interpreting a statute and reviewing the agency interpretation of the statute.

Going forward, Loper means that in most circumstances, the courts, instead of administrative agencies, will be tasked with filling in the gaps left by Congress after passing statutes and regulations, and approving or disapproving of a government policy. The exception to this general rule is when the statute specifically grants the agency authority to interpret its meaning.

LOPER’S POTENTIAL EFFECT ON CITIES AND LOCAL GOVERNMENTS
Chevron has guided courts and administrative agencies for nearly 40 years, and is a linchpin of administrative law—governing how federal agencies promulgate rules and how courts review agency actions. Sometimes Congress is purposefully inexplicit in order to give the subject-area experts space to decide how best to implement a regulation. The Supreme Court’s repudiation of such landmark precedent is likely to usher in a new era of contentious litigation where the targets are administrative rulemaking and statutory interpretation by administrative agencies that regulate sectors such as banking and finance, taxation, environmental protections, water, healthcare, housing, federal wage and hour, employment and union issues.

Some potential implications of the Supreme Court’s ruling in Loper will likely include:

• Increased Judicial Scrutiny: To the extent that local governments rely on interpretations by federal agencies to craft local rules and ordinances (e.g. interpretations by EPA, HUD, etc.), those interpretations may now be open to challenges. Where local governments have ordinances or regulations based on federal agency interpretations, there is a risk that those will need to be amended in the event agency interpretations are overruled or changed.
  
  
• Policy Uncertainty: Overturning Chevron could lead to inconsistencies in local administrative decision-making. The lack of clear guidance on statutory interpretation at the federal level could result in conflicting interpretations and implementations at the local level, exacerbating policy uncertainty.
  
  
• Shift in Judicial Review of Government Actions: Chevron has caused courts to traditionally defer to federal agency interpretations of statutes. This decision by the Supreme Court will likely shift the balance, exposing regulatory decisions to more extensive and critical examination by the courts. Local governments may find themselves having to navigate a more complex and uncertain legal landscape, potentially influencing how they draft and enforce regulations.
  
  
• Challenges to Local Ordinances: The overturning of Chevron could embolden legal challenges to local ordinances. This may impact the autonomy of local governments in shaping and implementing policies within their jurisdictions, leading to increased legal battles over the validity and enforcement of local laws. Local ordinances, especially those addressing novel or contentious issues, may face a higher likelihood of legal challenges, requiring local governments to allocate additional resources to defend their policies.

The longer-term effects of the Loper decision remain to be seen, although it seems reasonable to conclude that at the very least, there will be a significant uptick in litigation surrounding federal administrative agencies and their rulemaking authority, especially in high profile sectors affecting local affairs such as housing, land use, oil and gas, environmental protection, and public safety. In a post-Chevron world, agencies will have to defend interpretations as a persuasive interpretation of a statute, rather than just a permissible construction of ambiguous language or appropriate agency action in the face of congressional silence. Increased judicial scrutiny and policy uncertainties may reshape how local governments navigate their regulatory landscapes and respond to the needs of their communities.