On June 28, 2024, in Loper Bright Enterprises v. Raimondo, 144 S.Ct. 2244 (2024), the Supreme Court overruled its 1984 Chevron U.S.A., Inc. v. NRDC, Inc., 467 U.S. 837 (1984), decision and the legal doctrine of Chevron deference with it. In doing away with Chevron deference, the Court has broken from the accepted regulatory landscape of the last 40 years, which will have dramatic effects on environmental law for decades to come. This article explains the Court’s decision and its impacts on regulated entities, beginning with an analysis of what Chevron deference was.

What was Chevron deference?

Our elected members of Congress are human, and therefore, the statutes they draft are not flawless. Statutes are routinely full of ambiguities—words left undefined or otherwise subject to differing interpretations. These ambiguities are either the unintentional product of careless drafting or the intentional allowance by Congress for a statute to evolve over time.

In agency-administered statutes, like many of those concerning environmental law, agencies are often expressly delegated authority to issue regulations closing the statutory ambiguities. For example, the Clean Air Act requires the Environmental Protection Agency (EPA) to prescribe national air quality standards to protect the public health, and it expressly delegates interpretive authority to EPA to determine the appropriate standards. 42 U.S.C. § 7409(a)–(b).

However, there are infinitely more ambiguities where Congress has not expressly delegated interpretive authority to an agency. Chevron deference served as a presumptive default rule with regard to these ambiguities. The doctrine was a legal framework where courts deferred to an agency’s interpretation of a statute if: (1) the statute is one the agency is charged with administering; (2) the statute is ambiguous with regard to a particular matter; (3) Congress was silent as to who should interpret the ambiguity; and (4) the agency’s interpretation of that matter is reasonable. An agency’s interpretation received controlling weight if all four elements were met. Otherwise, the court would afford the agency persuasive deference and utilize traditional tools of statutory interpretation, such as dictionaries, textual canons, legislative history, and evidence of congressional purpose to analyze the statutory ambiguity and resolve it as a matter of law.

What was Loper Bright about?

Loper Bright involved challenges to regulations issued by the National Marine Fisheries Service (NMFS) pursuant to the Magnuson–Stevens Fishery Conservation and Management Act (MSA) by a group of herring fishermen. The regulations required third-party observers to be present on some commercial fishing vessels to monitor fishing trips as part of an effort to prevent overfishing. The MSA, however, was silent as to who was responsible for bearing the cost of the observers—the fishermen or the government. For many years, the NMFS fully funded the observer coverage. However, once federal funding for the observers became unavailable, the vessel became responsible for contracting with and paying for a government-certified third-party observer. The herring fisherman argued that the MSA does not authorize NMFS to mandate that they pay for observers.

Both the D.C. Circuit and First Circuit Courts of Appeals ruled in favor of NMFS and utilized Chevron deference to conclude that the agency’s interpretation was reasonable. However, the Supreme Court in a 6-3 decision, sided with the fishermen and struck down Chevron calling it “fundamentally misguided.”

What arguments were made in Loper Bright?

Those who supported Chevron routinely made two arguments. First, agencies—in drafting regulations—are required to decide highly technical matters and courts lack the scientific and technical expertise to decide these matters. For example, in assessing the proper time and temperature at which whitefish must be smoked to avoid botulism but maintain a marketable product, agencies employ food safety experts and data scientists to develop a regulation that is both safe for consumers and feasible for regulated entities in light of public and private studies. United States v. Nova Scotia Food Products Corp., 568 F.2d 240 (2d. Cir. 1977). Second, because the promulgation of regulations frequently involves policy decision making, Chevron’s advocates argue that agencies are better suited than courts to make these policy decisions because they are accountable to Congress, the president, and, ultimately, the voting public. Federal judges are unelected and, by design, unaccountable to the other branches of government or the electorate.

In contrast, Chevron’s opponents argued that the doctrine diminished the role of courts in interpreting the law—their primary Constitutional function. Since Marbury v. Madison, 5 U.S. 137 (1803), courts have been tasked with interpreting the law. Those who oppose Chevron argued that this duty was reiterated in the Administrative Procedure Act, originally enacted in 1946 to govern judicial review of agency action. 5 U.S.C. § 706. Chevron’s opponents argued that giving controlling deference to an agency’s interpretation unconstitutionally ties the hands of judges in interpreting the law and is incompatible with the Administrative Procedure Act.

What will the resulting regulatory landscape look like?

Without Chevron deference, courts will revert to a more limited deferential review of agency interpretations known as Skidmore deference. Skidmore v. Swift & Co., 323 U.S. 134 (1944). Under Skidmore deference, courts defer to agency interpretations according to the thoroughness of the agency’s consideration, the validity of its reasoning, its consistency with earlier regulations, and “all those factors which give it power to persuade, if lacking power to control.” Therefore, an agency’s regulation interpreting a given statute will receive persuasive rather than controlling weight.

While those who oppose regulation may rejoice that agencies’ interpretations will never again be afforded controlling weight in litigation, replacing Chevron with Skidmore has not been universally popular among the opponents of the administrative state. Supreme Court Justice Scalia—himself famously skeptical of government regulation—supported Chevron because he feared that Skidmore would lead to “the ossification of large portions of our statutory law.” U.S. v. Mead Corp., 533 U.S. 218, 247 (2001) (Scalia, J., dissenting). He argued that agency interpretations upheld as reasonable under Chevron were subject to ongoing reasonable interpretations, which would undoubtedly change with changing administrations. After Loper Bright and the return to Skidmore deference, once a court has ruled on a statutory ambiguity, the ambiguity is closed and it is to be interpreted in line with the court’s decision—as a matter of law—tying the hands of the agency, regulated entities, and judges in future matters. Thus, as Scalia feared, “ambiguity (and hence flexibility) will cease with the first judicial resolution.” Mead Corp., 533 U.S. at 247 (Scalia, J., dissenting).

What does this mean for regulated entities?

The Court’s decision in Loper Bright will likely result in increased litigation and uncertainty for regulated entities. Because Congress drafted statutes in light of Chevron for the last 40 years, many statutes were purposefully ambiguous so as to require the agency to do the difficult and largely unpopular work of interpreting those ambiguities. Many of those ambiguities will now be the subject of litigation. In addition, many longstanding regulations were drafted with Chevron in mind, and were never challenged because Chevron deference would decide the case in the agency’s favor. Now, many of these regulations—some of which have existed for 40 years—will likely be challenged in court. Lastly, courts have decided cases with Chevron as binding precedent. Indeed, Chevron is the most frequently cited case in administrative law. Now, every case which upheld a given regulation under Chevron is subject to re-litigation.

This onslaught of cases in the lower courts should concern regulated entities. First, the ossification of the regulatory state could bind a regulated entity indefinitely if an agency’s regulation is upheld under Skidmore. Gone are the days of business-friendly administrations relaxing the reach of regulations passed by government-friendly administrations. Now, every case involving a regulatory question will be much higher-stakes because the agency has no discretion or flexibility in its interpretation once the ambiguity has been resolved as a matter of law. This increase in litigation in the lower courts will cause an unstable regulatory background against which businesses must order their affairs. In the coming years, re-litigation of decades of regulations will lead to ever-changing obligations for businesses, making it more difficult for a given business to maintain compliance. Furthermore, different district courts will adopt different constructions of relevant statutes depending on the particular tools of interpretation they prefer and the arguments made by parties to the case. The resulting patchwork of regulatory obligations will inevitably cause headaches for all businesses, especially those whose operations span across state or circuit lines.

For assistance in environmental or regulatory matters, please contact one of the attorneys in the Environmental, Energy & Sustainability Service Group.