Supreme Court Strikes Down Chevron, Reshapes Administrative Law
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Supreme Court Strikes Down Chevron, Reshapes Administrative Law

Brownstein Client Alert, July 2, 2024

In a series of rulings at the end of its term, the Supreme Court fundamentally changed administrative law precedents, including some that have held firm for more than 40 years. The decisions will curtail federal agencies’ ability to interpret laws they administer when a governing statute is silent or ambiguous on an issue, and empower courts to use tools of traditional statutory construction for ambiguous laws. Each decision, as outlined below, will have far-reaching effects for all federal regulations and lawmaking in Congress.


Overturning Chevron Deference: Loper Bright and Relentless

On Jan. 17, the U.S. Supreme Court heard oral arguments in Relentless, Inc. v. Department of Commerce (“Relentless”) and Loper Bright Enterprises., Inc. v. Raimondo (“Loper”), a pair of cases that the court used to determine if Chevron, U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984) should be overruled or clarified. Under Chevron, courts defer to agency interpretations of ambiguous statutes, as long as the interpretation is found to be reasonable. Leading up to oral arguments, legal scholars predicted that limiting or upending the Chevron doctrine would pull back the leeway that agencies have had in interpreting statutes. On June 28, the Supreme Court issued its ruling overturning Chevron.

The ruling will curtail the power of executive agencies to wield rulemaking authority in interpreting silent or ambiguous statutes passed by Congress. The 6-3 majority opinion, written by Chief Justice John Roberts and joined by the court’s conservative bloc, held that the Chevron doctrine violated the Administrative Procedure Act (APA) by deferring judgment about the interpretation of the law away from the judiciary and toward executive agencies. Roberts’ opinion holds that Chevron deference “cannot be squared with the APA,” and restores the final word concerning the implementation of “constitutional and statutory provisions” to the courts. Roberts justifies this by saying that Chevron was an arbitrary judicial ruling that departed from the “traditional judicial approach” of adjudicating legislative statutes, leading to concerns of “competence” in resolving ambiguities, and that statute ambiguities have been misguided in its implicit delegation to agencies for the purposes of resolution since Chevron.

Justice Clarence Thomas wrote a separate concurring opinion in which he argued that Chevron was a fundamental violation of the Constitution’s separation of powers principle, as it allowed the executive branch to exercise powers that had not been given to it. Justice Neil Gorsuch wrote another separate concurring opinion arguing that the proper application of stare decisis and subsequent decisions by the judiciary supports the overturning of Chevron. Justice Elena Kagan wrote the dissenting opinion, joined by the court’s liberal bloc, arguing that Chevron deference has been integral to modern governance and that its overturn is at odds with stare decisis and would “cause a massive shock to the legal system.” She argued that the majority’s insistence of deferring interpretive regulatory authority to the courts due to a “belief” does “not justify overhauling a cornerstone of administrative law,” equating the majority’s decision to a power grab.


Expanding the Time Frame for Challenges to Regulations: Corner Post

In Corner Post, Inc. v. Board of Governors of the Federal Reserve System, the Supreme Court determined when the statute of limitations under the APA begins to run for a plaintiff. The case was brought by a North Dakota truck stop alleging injury caused by a debit card interchange fee rule that the Fed promulgated in 2011. The plaintiffs argued that they were unable to challenge the rule when it was originally promulgated because they opened for business in 2018, and instead argued that the clock should have started running when the regulation first affected the company. On July 1, the court held that claims under the APA do not accrue for purposes of the six-year statute of limitations until the plaintiff is actually injured by a final agency action. This interpretation will expand the ability of parties to sue the federal government by allowing a party to sue the federal government long after a final rule has been promulgated. The dissent, written by Justice Ketanji Brown Jackson, warned that the court’s decision will lead to increased litigation that could “wreak havoc” on government agencies and the rulemaking process.


Moving Enforcement Powers from Federal Agencies to Courts: Jarkesy

In Securities and Exchange Commission (SEC) v. Jarkesy, the Supreme Court considered whether federal agencies can use their internal tribunals to carry out enforcement actions. The case turned on whether a hedge fund manager accused of defrauding investors is entitled to a jury trial to determine whether he violated federal securities law. The investor, George Jarkesy, ran two hedge funds that the SEC said were committing fraud. The agency brought an enforcement action against Jarkesy before an administrative law judge who ordered Jarkesy to pay a $300,000 penalty and to disgorge $685,000 in illicit profits. Jarkesy appealed the ruling arguing that he was entitled to a trial by jury.

On June 27, the court held that the SEC must bring enforcement actions to a jury trial in an Article III court rather than to an internal tribunal in front of an administrative law judge (ALJ). The majority found that a defendant facing a civil fraud suit has “the right to be tried by a jury of his peers before a neutral adjudicator. Rather than recognize that right, the dissent would permit Congress to concentrate the roles of prosecutor, judge, and jury in the hands of the executive branch.”

While the decision was specific to the SEC, it is expected it will reverberate across the federal government, where dozens of agencies rely on internal administrative proceedings for enforcement actions, including the Federal Communications Commission (FCC), the Consumer Financial Protection Bureau (CFPB), Environmental Protection Agency (EPA), the Department of Justice (DOJ) and several others. Ultimately, legal experts expect the jury trial requirement will lead agencies to bring fewer enforcement actions in the future given the amount of time and resources that jury trials require. It is expected that various impacted stakeholders will bring similar challenges against other agencies with internal processes carried out by ALJs.



The Supreme Court’s decisions from this term will fundamentally change the landscape for agencies, Congress and the federal courts. In the near term, we expect these decisions will encourage more challenges to agency interpretations of statues, potentially allowing for new legal theories where courts have previously upheld agency positions. In the long term, we expect agencies will change how they promulgate rules when they do not have clear authority from Congress on a certain issue, and lower courts will adjust how they review agency actions. Notably, the Supreme Court has mostly abandoned the use of the Chevron Doctrine in recent years, focusing more on the recent decision in West Virginia v. EPA, related to the Major Questions Doctrine. However, there are a host of potential implications as detailed below.


Federal Agencies

Agenciesmay find it more difficult to promulgate and defend regulations that go beyond explicit statutory authority. This may limit flips in interpretations of statutory authority based on administration preferences. Agencies might also see an increase in the influence of the general counsel’s office over policy offices when it comes to developing regulations, guidance and formal agency actions, as agencies anticipate judicial review of their interpretations based on legal rules of statutory interpretation that will be most convincing to judges. Industry commenters for proposed rules will also likely increase their focus on building the legal record and outlining relevant information such as statutory history, in addition to advocating for certain positions. Arguably Congressional outreach explaining the purpose or intent of laws, could be given more weight.

Agencies that press the limit of their statutory authority and invite frequent legal challenges, such as the Consumer Financial Protection Bureau (CFPB), are the agencies most likely to be acutely impacted by the decision. Rulemaking such as the CFPB’s recent overdraft fee proposal, FCRA medical debt proposal, credit card late fees rule and small business lending rule among others, could face increased legal scrutiny. Additionally, the Securities and Exchange Commission’s (SEC) climate disclosure proposed rule, would be more susceptible to a challenge, impacting nearly every industry.



Congress will face more pressure to clearly articulate agency authority and delegate fewer details to administrative agencies. Looking at the political reality, members of Congress may no longer be able to rely on party-aligned executive and independent agencies to engage in policymaking that conforms to political priorities if those priorities have not first been passed into law, or, avoid political debate by pushing agencies to instead address certain questions.



Courts may see an increase in their dockets as potential parties anticipate a greater chance of success from litigation challenging agency statutory interpretations. Judges may face increased scrutiny of their decisions and pressure to justify their construction of statutes as impartial interpretations of legislation rather than based on their own policy preferences.

In at least some agencies, uncertainty over the future of Chevron has already resulted in the agencies relying less on expected judicial deference in formulating and defending their interpretations of statutory authority. In a post-Chevron world, agencies will have to defend interpretations as a persuasive interpretation of a statute, rather than just a permissible construction of ambiguous language or appropriate agency action in the face of congressional silence.


Next Steps

The Brownstein Government Relations team will continue to closely monitor the regulatory landscape, including the expected increase in challenges to regulations. Our practice area experts will be publishing additional alerts with a deeper dive into particular regulatory challenges for specific industries. Please reach out to the authors of this alert to learn more about these developments and for additional analysis.



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