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In a landmark decision released on June 28, the U.S. Supreme Court overturned one of the most widely applied legal principles of the last three decades. In a 6-3 decision in Loper Bright Enterprises v. Raimondo and Relentless Inc. v. Department of Commerce, the Court overturned the Chevron doctrine which directs the courts to defer to federal agencies’ “reasonable interpretations” of unclear statutes from Congress.

The doctrine previously provided both Democratic and Republican administrations with flexibility in determining regulations. Conservatives felt as if federal agencies were collecting too much power through this doctrine, urging that some of this power be redistributed to the courts. The ruling will do just this, by limiting the decision-making power of federal agencies and empowering the legislative and judicial branches with greater regulatory responsibilities.

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Established in the 1984 ruling of Chevron USA Inc. v. Natural Resources Defense Council, <a href="https://url.us.m.mimecastprotect.com/s/0qvgCgJ7jrcmgQBDFNEFWa?domain=rnn4sp8ab.cc.rs6.net" target="_blank" rel="noopener">Chevron </a><a href="https://url.us.m.mimecastprotect.com/s/0qvgCgJ7jrcmgQBDFNEFWa?domain=rnn4sp8ab.cc.rs6.net" target="_blank" rel="noopener">deference</a> is based on the understanding that federal agencies are composed of experts who are better equipped than the courts to determine the logistics of a subject matter, authorizing these agencies to mandate in their areas of expertise.

In January, the Court heard oral arguments for two appeals challenging the same agency mandate. In Loper and Relentless Inc., in which both plaintiffs are commercial fishing companies, the parties argued against regulations imposed on their corporations by the National Marine Fisheries Service (NMFS). In 2020, NMFS acted based on their interpretation of <a href="https://url.us.m.mimecastprotect.com/s/KeQlCjRAmxF36NOVcRlYb1?domain=rnn4sp8ab.cc.rs6.net" target="_blank" rel="noopener">Magnuson-Stevens Fishery Conservation and Management Act</a> (MSA) and imposed regulations requiring commercial fishing corporations to cover the cost of paying observers when congressionally appropriated funds do not cover the cost. The corporations argued that the NMFS is not authorized under the MSA to require <a href="https://url.us.m.mimecastprotect.com/s/KeQlCjRAmxF36NOVcRlYb1?domain=rnn4sp8ab.cc.rs6.net" target="_blank" rel="noopener">“industry-funded monitoring."</a>

In their recent decision, the Court sided with the fishing corporations claiming Chevron improperly provided federal agencies, rather than the judiciary, the power to interpret laws. In the years leading up to this decision, the Court has weakened agency authority by applying the <a href="https://url.us.m.mimecastprotect.com/s/zbP0CkR6nyFrLGwPTQoTzP?domain=rnn4sp8ab.cc.rs6.net" target="_blank" rel="noopener">major questions doctrine</a> to cases regarding issues of “economic and political significance”.

Under this new doctrine, the Court has primarily rejected agencies’ assertions of regulatory power related to the environment, health, and tech. Michael Best Partner <a href="https://url.us.m.mimecastprotect.com/s/ab6jClY8ozcA94MjFqtoUk?domain=rnn4sp8ab.cc.rs6.net" target="_blank" rel="noopener">Joe Olson</a> noted that, for current laws, this creates a significant opportunity to challenge current agency interpretations through litigation free from the head start that Chevron gave to the regulators. "Industry and regulators will be on much more even footing. For future statutes, this creates a real opportunity for interested parties to directly impact that size, shape, and scope of future regulatory frameworks in way we haven’t seen in 40 years. Establishing relationships with members of the House and Senate is more crucial than ever." This trend will likely continue as we will see major implications for regulations addressing climate change, health care, and food and drug safety.

For the past forty years, the Chevron doctrine has provided executive agencies with flexibility in determining regulations. With this decision, federal agencies’ jurisdiction in regulating will be limited.

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Congress will need to devote further efforts to outlining the logistics of complicated legislation to avoid possible ambiguities. A lack of specificity will likely result in judicial review being used to determine policy outcomes, allowing judges to impose personal policy views more easily.

The amount of litigation that will ensure challenging existing and future regulations will increase, especially in the food, health, safety, and environmental industries.

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Please reach out to your Michael Best Strategies servicing team with any questions.

Close-up of a wooden judge’s gavel resting on a sounding block in a courtroom setting.

Close-up of a wooden judge’s gavel resting on a sounding block.

The Supreme Court Overturns Longstanding Chevron Deference

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