SCOTUS Strikes Down Chevron Deference, Reshaping Federal Agency Power in Loper Bright v. Raimondo

In a seismic shift for administrative law, the Supreme Court’s decision in Loper Bright Enterprises v. Raimondohas overturned the decades-old Chevron deference, fundamentally redefining the relationship between federal agencies, the judiciary, and Congress. The ruling, handed down on June 28, 2024, marks a decisive turn in the Court’s approach to agency power, reasserting the judiciary’s role as the ultimate interpreter of federal statutes. By dismantling Chevron,

the Court has not only curtailed the authority of federal agencies but also signaled a broader recalibration of the balance of power within the federal government.

Chevron deference is a foundational principle in U.S. administrative law that guides how courts review federal agencies' interpretations of statutes they are tasked with enforcing. Established by the Supreme Court in the 1984 case Chevron U.S.A. Inc. v. Natural Resources Defense Council (NRDC), the doctrine provides a two-step framework for courts to determine whether to defer to an agency's interpretation of an ambiguous statute.

Image source: loperbrightcase. com

What's The Matter?

The case began as a challenge by Loper Bright Enterprises , a family-owned fishing company, against a regulation imposed by the National Marine Fisheries Service (NMFS) . Under the Magnuson-Stevens Fishery Conservation and Management Act , NMFS required commercial fishing vessels to pay for at-sea monitors to ensure compliance with federal fishing regulations.

For small businesses like Loper Bright, the cost—approximately $710 per day—was a significant financial burden, cutting into already slim profit margins. When the D.C. Circuit Court of Appeals upheld the regulation, relying on Chevron deference to defer to NMFS’s interpretation of the statute, the fishing companies appealed to the Supreme Court, setting the stage for a landmark ruling.

The Supreme Court’s Ruling

In a 6-3 decision, the Court overturned Chevron, holding that courts must no longer defer to agency interpretations of ambiguous statutes. Writing for the majority, Chief Justice John Roberts emphasized that the Administrative Procedure Act (APA) assigns the task of statutory interpretation to the judiciary, not executive agencies.

The Court rejected the notion that statutory ambiguity automatically grants agencies the authority to fill in the gaps, insisting instead that courts must exercise independent judgment to determine the best reading of a statute. This ruling aligns with the Court’s recent trend of limiting agency power, as seen in cases like "West Virginia v. EPA (2022) where the Court invoked the major questions doctrine to block sweeping environmental regulations.

The major questions doctrine is a principle in U.S. administrative law that limits the authority of federal agencies to make decisions of significant economic, political, or societal importance without explicit authorization from Congress. It serves as a check on agency power, ensuring that major policy decisions are made by elected representatives rather than unelected bureaucrats.

The implications of this decision are profound.

For federal agencies, the ruling represents a significant loss of autonomy. Agencies like the EPA, FDA, SEC, and NLRB will now face heightened judicial scrutiny, making it harder for them to issue broad regulations based on vague statutory language.

This shift places greater pressure on Congress to draft clear and specific laws if it intends to delegate regulatory authority to agencies. However, in an era of legislative gridlock, this requirement could lead to regulatory stagnation, leaving agencies hamstrung in their ability to address complex and evolving challenges.

For businesses and industries, the decision offers a powerful tool to challenge federal regulations. Corporations and industry groups can now more effectively contest agency rules in court, potentially weakening regulations in areas like environmental protection, workplace safety, and consumer rights.

At the same time, the ruling introduces a degree of uncertainty, as courts may reach inconsistent interpretations of statutes without the unifying framework of Chevron deference.

The dissenting opinion, authored by Justice Elena Kagan and joined by Justices Sotomayor and Jackson warns of the destabilizing effects of the ruling. Kagan argued that agencies, with their subject-matter expertise, are better equipped than courts to address complex regulatory issues.

The decision represents a watershed moment in administrative law, signaling a new era where courts, not agencies, hold the final say on statutory interpretation. While proponents of the ruling celebrate it as a victory for constitutional separation of powers and democratic accountability, critics fear it will weaken the federal government’s ability to regulate effectively. As the dust settles, one thing is clear: the decision will reshape the regulatory landscape for years to come, forcing agencies, Congress, and the judiciary to navigate a new and uncertain terrain.

The Case underscores a foundational principle: agencies cannot bypass Congress. Major policy decisions, especially those with far-reaching economic and societal impacts, must be made by elected representatives, not unelected bureaucrats. This ruling reaffirms the importance of legislative approval in shaping the nation’s regulatory framework, ensuring that power remains firmly rooted in the democratic process.