On June 28, 2024, the Supreme Court of the United States overturned a long-standing doctrine, known as Chevron deference, that impacts a court’s deference to a government agency’s action during administrative proceedings. The Supreme Court held that federal courts cannot defer to agencies’ interpretations of statutes. Instead, courts must independently make this determination.
Background
The Supreme Court established Chevron deference forty years ago. Under Chevron deference, courts considering whether an administrative agency’s interpretation of a statute is enforceable deferred to the agency’s interpretation. Such deference was granted if the agency was interpreting a statute Congress charged it with administering and the statute was either silent or ambiguous as to the specific issue being addressed by the agency. When these conditions were met, courts deferred to an agency’s reasonable interpretation of the law.
Despite being a familiar doctrine, it was also heavily litigated. The June 28 ruling answered how much deference a court should normally give to an agency’s interpretation of the law: none. Two cases before the court raised this question: (1) Loper Bright Enterprises, et al. v. Raimondo; and (2) Relentless, Inc. v. U.S. Department of Commerce, et al.
In both cases, the petitioners challenged the lower court’s deference to an agency’s interpretation of a statute that required fishing vessel operators to permit federal observers on their boats and pay the observers’ salaries for time spent onboard. The petitioners argued the agency overstepped by implementing these requirements and claimed the D.C. Circuit and the First Circuit erred when they deferred to the agency’s interpretation of the statute that authorized these actions.
The Supreme Court only reviewed the latter claim—how much deference a court can give to an agency’s action when applying Chevron.
The Supreme Court’s Decision
The Supreme Court ruled that under the Administrative Procedure Act, a federal law that governs the process and procedures of administrative law, courts must exercise independent judgment when deciding whether an agency acted within its statutory authority. It cannot defer to the agency’s interpretation as previously allowed under Chevron. The Court reasoned that the APA codified “that courts decide legal questions by applying their own judgment.” It held that courts must determine all questions of law, not agencies.
In doing so, judges must “use every tool at their disposal to determine the best reading of [a] statute and resolve [any] ambiguity.” That expertise rests with courts—not agencies. This change means that, unlike decades of previous caselaw, courts are no longer bound to accept an agency’s interpretation of statutory ambiguities.
The Impact of the Ruling
The effect of today’s ruling is significant and changes the courts’ method of analysis for determining lawful agency action. The decision was ultimately broader than many analysts anticipated and its full impact remains unknown.
What we do know:
- Courts may consider an agency’s interpretation of a statute but are not bound to follow that interpretation simply because the statute is ambiguous.
- Courts will read and interpret the statutes independently to determine the best reading of the statute.
Critically, the decision does not undo the underlying decisions that relied on Chevron. The Supreme Court stated that these prior cases remain good law. The change in “interpretive methodology” does not alter those former rulings.
Practical Takeaways
- Courts will no longer defer to an agency’s interpretation of a statute when determining whether the action is lawful.
- While Chevron’s deference is overruled, previous cases that held an agency’s action was lawful under Chevron still stand.
- The ruling changes forty years of precedent that impacts the federal regulatory arena—including health regulation. The decision was broader than many analysts anticipated, and its full impact is still unknown. For clients who continually work with federal agencies, such as the Centers for Medicare and Medicaid Services, stay tuned for more detailed analysis regarding the impact of Loper in the coming days.
If you have questions on the effect of these developments, please contact:
- Drew Howk at (317) 429-3607 or dhowk@hallrender.com;
- Elizabeth Elias at (317) 977-1468 or eelias@hallrender.com;
- Heather Mogden at (414) 721-0457 or hmogden@hallrender.com;
- Sarah Crosby at (317) 429-3663 or scrosby@hallrender.com; or
- Your primary Hall Render contact.
Special thanks to Kelsey A. Linzell, Summer Associate, for her assistance in preparing this post.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.
