For the last 40 years, federal courts have cited Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. 867 (1984), to defer to an administrative agency’s “permissible” interpretation of the statutes that it administers—even when a reviewing court reads the statute differently. Chevron has long been targeted by conservatives and business interests who argue that its deferential standard robs courts of their authority and gives too much power to federal agencies.

On June 28, in Loper Bright Enterprises v. Raimondo, 603 U.S. ___, 2024 WL 3208360, together with its companion case, Relentless v. Department of Commerce (No. 22-1219) (collectively Loper Bright), the U.S. Supreme Court overruled Chevron, holding that the Administrative Procedure Act (APA) requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority, and courts may not defer to an agency interpretation of the law simply because a statute is ambiguous. It is difficult to overstate the significance of this watershed decision.

Chevron adopted a two-step framework to interpret statutes administered by federal agencies. At step one, the reviewing court must assess “whether Congress has directly spoken to the precise question at issue.” 467 U.S. at 842. “If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.”

At step two, “if the statute is silent [as to the intent of Congress] or ambiguous, the question for the court is whether the agency’s answer is based on a permissible construction of the statute” (material in brackets added). The lower courts in Loper Bright applied this analytical framework, known as “Chevron deference.”

Auer v. Robbins, 519 U. S. 452 (1997), similarly required judicial deference to agencies’ interpretations of their own rules and regulations.

The argument against Chevron deference focuses on the separation of powers between courts and executive agencies. Justice Neil Gorsuch aptly summarized this argument in his dissent to the denial of certiorari in Buffington v. McDonough, 598 U.S. ___, 143 S. Ct. 14, 18–19 (2022) (mem.): “Rather than provide individuals with the best understanding of their rights and duties under law a neutral magistrate can muster, we outsource our interpretive responsibilities. Rather than say what the law is, we tell those who come before us to go ask a bureaucrat.”

Ascension of the Major Questions Doctrine

In a series of recent cases of major economic and political significance, the Supreme Court has embraced a nondeferential “major questions” doctrine that undercuts Chevron. Under the major questions doctrine, where there is reason to doubt that Congress has authorized a particular agency action, “both separation of powers principles and a practical understanding of legislative intent” require the agency to point to “clear congressional authorization” for its action. See West Virginia v. Environmental Protection Agency, 597 U.S. 697, 142 S.Ct. 2587, 2595 (2022). This doctrine “address[es] a particular and recurring problem: agencies asserting highly consequential power beyond what Congress could reasonably be understood to have granted.” See 142 S.Ct. at 2609.

For example, in the Centers for Disease Control and Prevention (CDC) eviction moratorium case, Alabama Association of Realtors v. Department of Health and Human Services, 594 U.S. 758, 141 S. Ct. 2485 (2021) (per curiam), the court held that the CDC could not, under its statutory authority to adopt measures “necessary to prevent the…spread of” disease, institute a nationwide eviction moratorium in response to the COVID–19 pandemic.

The court found the statute’s language a “wafer-thin reed” on which to rest such a measure, given “the sheer scope of the CDC’s claimed authority,” its “unprecedented” nature, and the fact that Congress had failed to extend the moratorium after previously having done so. See 141 S. Ct. 2489. “If a federally imposed eviction moratorium is to continue,” the court concluded, “Congress must specifically authorize it.”

In the Occupational Safety and Health Administration (OSHA) vaccine mandate case, National Federation of Independent Business v. Department of Labor, 595 U.S. 109, 142 S. Ct. 661 (2022) (per curiam), the court held that OSHA lacked authority to compel private employers with 100 or more employees to require that their employees be vaccinated against COVID-19 or submit to weekly tests and wear masks.

Noting that Congress must “speak clearly when authorizing an agency to exercise powers of vast economic and political significance,” the court concluded that Congress had only empowered OSHA “to set workplace safety standards, not broad public health measures.” See 142 S. Ct. at 664.

In the Environmental Protection Agency (EPA) greenhouse gas emissions case, West Virginia v. Environmental Protection Agency, supra, the court held that the EPA lacked authority to adopt the Clean Power Plan, which imposed caps on carbon dioxide emissions at a level that would force power plants to transition away from the use of coal to generate electricity.

Formally establishing the “major questions” doctrine, the court found it “‘highly unlikely that Congress would leave’ to ‘agency discretion’ the decision of how much coal-based generation there should be over the coming decades,” see 142 S. Ct. at 2595, and held that Congress must “speak clearly when authorizing an agency to exercise powers of vast economic and political significance.”

In the student loan forgiveness case, Biden v. Nebraska, 600 U.S. 477, 143 S. Ct. 2355 (2023), the court held that the Secretary of Education did not have authority under the Higher Education Relief Opportunities for Students Act of 2003 (known as the HEROES Act), passed in the wake of the Sept. 11 attacks, to establish a student loan forgiveness program that would cancel roughly $430 billion in debt principal and affect nearly all borrowers.

The court concluded that “[t]he basic and consequential tradeoffs” inherent in a mass debt cancellation program “are ones that Congress would likely have intended for itself,” and in such circumstances the Secretary was required to—but could not—“point to ‘clear congressional authorization’ ” to justify the challenged program. See 143 S. Ct. at 2375.

The Supreme Court conservative majority’s embrace of the major questions doctrine in these cases, a product of its skepticism of ambitious executive-branch policymaking without explicit Congressional authorization, did not bode well for the continued vitality of Chevron.

‘Chevron’ Overruled

Loper Bright arose from a federal agency’s dubious interpretation of a rule that placed a heavy financial burden on a group of family-owned companies that fish for Atlantic herring. The fishing companies brought suit challenging the rule requiring them to pay the costs of on-board federal observers who monitored their compliance with limits aimed at preserving fish stocks.

The Magnuson-Stevens Fishery Conservation and Management Act (MSA) governs fishery management in federal waters and gives the National Marine Fisheries Service (NMFS) power to promulgate specific rules for fishery management plans, and generally “to prescribe such other measures, requirements, or conditions and restrictions as are determined to be necessary and appropriate for the conservation and management of the fishery.”

In three narrow circumstances—none of which implicate the herring fishery—the MSA expressly required that “one or more observers be carried on board” domestic vessels “for the purpose of collecting data necessary for the conservation and management of the fishery,” and further required the vessel owners to cover the costs of such observers. The MSA does not contain similar provisions addressing whether Atlantic herring fishermen may be required to pay for on-board observers.

With respect to the Atlantic herring fishery, NMFS promulgated a rule creating an industry funded program that aimed to ensure observer coverage on vessels with certain types of permits (the rule). If NMFS determined that an observer was required, but declined to assign a government-paid one, then the vessel owner must pay for the observer. NMFS estimated that the cost of such an observer would be up to $710 per day, reducing annual returns to the vessel owner by up to 20%.

The vessel owners brought suit challenging the rule under the MSA, which incorporates the APA (5 U.S.C. § 551 et seq.) They argued that the MSA did not authorize NMFS to mandate industry-funded monitoring in the Atlantic herring fishery.

The district court awarded summary judgment to NMFS, holding at step one of the Chevron framework that the MSA “unambiguously” authorized industry-funded monitoring, but further holding that even if the statutory text was ambiguous, deference to the agency’s interpretation was warranted under Chevron. See 544 F.Supp.3d 82, 107 (D.C. 2021).

A divided panel of the U.S. Court of Appeals for the District of Columbia Circuit affirmed, but on a different rationale. See 45 F.4th 359 (2022). The court concluded that the MSA was not “wholly unambiguous” on the question of industry-funded monitoring in the herring fishery.

Proceeding to step two of the Chevron framework, the court held that NMFS’s interpretation of the MSA as obligating the industry, rather than the government, to bear the costs was a reasonable interpretation entitled to deference.

Writing for the 6-3 majority, Chief Justice John Roberts wrote that Chevron deference could not be squared with the APA, which Congress enacted in 1946 “as a check upon administrators whose zeal might otherwise have carried them to excesses not contemplated in legislation creating their offices.” See 2024 WL 3208360, at *12 (citation omitted).

The APA makes clear that “courts, not agencies, will decide ‘all relevant questions of law’ arising on review of agency action (emphasis added)—even those involving ambiguous laws—and set aside any such action inconsistent with the law as they interpret it” (citation omitted; emphasis in original). “And it prescribes no deferential standard for courts to employ in answering those legal questions.”

Chevron deference, the majority concluded, defies the command of the APA that the reviewing court, and not the agency whose action it reviews, is to “decide all relevant questions of law.” On the contrary, “[i]t requires a court to ignore, not follow, ‘the reading the court would have reached’ had it exercised its independent judgment as required by the APA.” See 2024 WL 3208360, at *15, citing Chevron, 467 U. S. at 843, n. 11.

The majority further concluded that stare decisis, the doctrine governing judicial adherence to precedent, did not require the Court to persist in the “Chevron project” see 2024 WL 3208360, at *19, for three reasons.

First, Chevron is “fundamentally misguided” because it cannot be reconciled with the APA. Second, Chevron is “unworkable” because its linchpin concept of statutory ambiguity “has always evaded meaningful definition.” And third, “rather than safeguarding reliance interests, Chevron affirmatively destroys them by allowing agencies to change course even when Congress has given them no power to do so.”

Overruling Chevron, the majority established the following principles of statutory interpretation going forward (see 2024 WL 3208360, at *22):

Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the APA requires. Careful attention to the judgment 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.

In a dissenting opinion joined by Justices Sonia Sotomayor and Ketanji Brown Jackson, Justice Elena Kagan predicted that overruling Chevron “will cause a massive shock to the legal system.” See 2024 WL 3208360, at *49. The countervailing argument is that at any disruption to the legal system caused by this landmark decision has been long overdue, as it restores the proper balance of power between courts and administrative agencies.

Reprinted with permission from New York Law Journal, © ALM Media Properties LLC. All rights reserved.