The Demise of Chevron: End of an Era or More of the Same?

In a pair of 6-3 decisions issued Friday and Monday, the U.S. Supreme Court dealt back-to-back blows to the administrative state. First, it ruled on Friday in Loper Bright that federal courts can no longer defer to federal agencies’ interpretations of statutes, overruling forty years of precedent under the “Chevron doctrine.”¹ Second, it ruled on Monday in Corner Post that the six-year statute of limitations on claims challenging final agency action under the Administrative Procedure Act (APA) does not begin to run until the plaintiff is injured by the agency’s action.²

Taken together, these rulings make it easier to challenge federal agency action in federal courts: now, even agency actions from more than six years ago can be challenged upon a showing of more recent injury (Corner Post), and once in court there will be no thumb on the scale for the federal agency when it comes to interpreting statutes (Loper Bright). But how much these changes in the law will alter agency litigation in practice remains to be seen.

Loper Bright marks the end of what Justice Gorsuch called the Supreme Court’s “forty-year misadventure” under Chevron, a 1984 decision holding that when a federal statute is ambiguous, the interpretive tie goes to the agency, whose interpretation will be sustained as long as it is reasonable.³ No more, said Chief Justice Roberts, writing for the majority. Now, “[c]ourts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority,” and “courts need not and under the APA may not defer to an agency interpretation of the law simply because a statute is ambiguous.”⁴

On paper, Loper Bright is a boon for businesses seeking to challenge federal agency actions. It means that agencies will no longer be able to prevail simply by showing that the statute is ambiguous, and their interpretation is reasonable. Instead, agencies will need to show that theirs is the “best interpretation”—something the Roberts majority appears to believe every statute has.

Loper Bright also writes another chapter in the centuries-old debate over who—as between the executive branch and the judiciary—has the power to “say what the law is.”⁵ If the majority is correct that this has always been the province of the courts—even in agency cases—and that courts largely continued doing this in practice even under Chevron, then Friday’s decision may be more about the decider than the outcome. So even if litigation blossoms, time will tell whether this is a case of “new standard, same result.”

That question remains open because, as Justice Elena Kagan pointed out in her dissent, there are numerous cases where the statute enacted by Congress is silent or intentionally vague on a particular subject, leaving it to the agency to figure out:

When does an alpha amino acid polymer qualify as a “protein”? How distinct is “distinct” for squirrel populations? What size “geographic area” will ensure appropriate hospital reimbursement? As between two equally feasible understandings of “stationary source,” should one choose the one more protective of the environment or the one more favorable to economic growth?⁶

In these cases and others faced by federal agencies, even after Loper Bright, “[c]areful attention to the judgment of the Executive Branch may help inform that inquiry.”⁷ And in many of those cases, the courts may use their power to conclude that the agency’s interpretation of a vague statute not only is reasonable (as under Chevron), but is the “single, best meaning” (as Loper Bright now requires).

This is how Quarles has seen a similar shift play out at the state level in Arizona, Florida, and Wisconsin—three jurisdictions in Quarles’ appellate footprint that independently rejected the state law equivalent of Chevron in 2018:

• Arizona overturned Chevron-type deference via a new statute signed into law by Governor Doug Ducey.⁸

• Florida abandoned the state’s former deference doctrine by amending the state constitution.⁹

• Wisconsin discarded its former deference to agencies’ legal interpretations in a state supreme court decision that now reads like a preview of Loper Bright,¹⁰ and that Wisconsin later codified in statute.¹¹

In these states, the agency’s view of the law is a matter of “respect” or “persuasion,” as opposed to binding deference. While Loper Bright makes clear that any “supposed equivalence” between the two is “a fiction,”¹² our experience litigating in “Chevron-free zones” since 2018 suggests that courts can reach the same result via a different route.

But not always. For example, just this past May, the Wisconsin Court of Appeals issued a decision determining (fifteen years after the fact) that an agency order issued to four electric utilities in 2009 should have been promulgated as a rule. In reaching that conclusion, the court reasoned—like the majority in Loper Bright—that the rulemaking challenge (like a question of “pure” statutory interpretation) was purely legal, “present[ing] a question that fits squarely within the expertise of the judicial branch.”¹³ While the court acknowledged that “the technical and regulatory aspects of the production, distribution, and sale of energy are complex in numerous respects,” it opined that the “rulemaking claim does not require factfinding or specialized knowledge of these fields.”¹⁴ And without a nuanced understanding of how this state agency regulated the retail energy market in coordination with the wholesale energy market regulated by FERC, the court went on to overturn the state agency action, concluding that the order must have been a rule.

At least at the margins, and perhaps more widespread, Loper Bright means this sort of analysis will play out more frequently—often in regulated businesses’ favor. As for how often that will occur, both Loper Bright and Corner Post offer clues:

• Loper Bright does not overrule other court decisions that upheld federal agency action in reliance on Chevron.¹⁵ But that protects only the specific agency actions at issue in those cases—and as the dissent points out, even those actions could be subject to challenge if a challenger shows “special justification,” such as sufficiently poor reasoning or something “unworkable” in the old decision.¹⁶
• On top of this, in holding that APA challenges are triggered by injury and not by the underlying agency action, Corner Post makes clear that the courts are open to more of these challenges than they were before Monday.

For now, Loper Bright and Corner Post do not impact another important area of agency litigation: challenges to agencies’ interpretations of their own rules. The Supreme Court reaffirmed its longstanding precedent in that area, Auer, just five years ago.¹⁷ But two seats on the high court have changed hands since then. And Auer’s reliance on Chevron’s logic, combined with this Supreme Court’s diminishing regard for stare decisis, suggest that Auer may be next.

For more information or if you have any questions, please contact your local Quarles attorney or:

• James Goldschmidt: (414) 277-5663 / james.goldschmidt@quarles.com
• Matthew Splitek: (608) 283-2454 / matthew.splitek@quarles.com

END NOTES

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¹ Loper Bright Enterprises et al. v. Raimondo, Secretary of Commerce, et al., 603 U.S. ____ (2024).

² Corner Post, Inc. v. Board of Governors of the Federal Reserve System, 603 U.S. ____ (2024).

³ Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).

⁴ Loper Bright, slip op. at 35 (emphasis added).

⁵ Marbury v. Madison, 1 Cranch 137, 177 (1803).

⁶ Loper Bright, slip op. at 13 (Kagan, J., dissenting).

⁷ Id. at 35 (majority op.).

⁸ ARIZ. REV. STAT. ANN. § 12-910(E) (2018).

⁹ FLA. CONST. art. V, § 21.

¹⁰ Tetra Tech EC, Inc. v. Wis. Dep’t of Revenue, 914 N.W.2d 21, 54 (Wis. 2018).

¹¹ Wis. Stat. § 227.57(11).

¹² Loper Bright, slip op. at 13 n.3.

¹³ Midwest Renewable Energy Association v. Public Service Commission of Wisconsin, No. 2022-AP-968, ___ Wis. 2d ___, ___ N.W.2d ___ (May 31, 2024), ¶ 28 (opinion ordered published).

¹⁴ Id.

¹⁵ Loper Bright, slip op. at 34 (“we do not call into question prior cases that relied on the Chevron framework”).

¹⁶ Id., slip op. at 31 (Kagan, J., dissenting).

¹⁷ Kisor v. Wilkie, 588 U.S. 558, 588 (2019), affirming Auer v. Robbins, 519 U.S. 452 (1997).