The US Supreme Court issued its decision June 28 overruling the 40-year old Chevron deference, which required courts to defer to agency’s reasonable interpretations of ambiguous or silent statutes. So what is a regulated party to do now?
Number 1: Don’t panic. Just because a rule was previously upheld under Chevron doesn’t automatically mean it will be overturned.
Not every Administrative Procedure Act case was a Chevron case—Chevron only applied when an agency interpreted an ambiguous or silent statute, and even then, only in a comparatively formal manner. Chevron never applied where Congress expressly delegated an issue to an agency; where an agency’s interpretation came in informal, non-binding guidance; or where the agency was interpreting its own regulation.
Nor are the 70 Supreme Court cases or thousands of circuit court decisions holding “that specific agency actions are lawful” necessarily at risk of being overturned on a fresh post-Chevron look. The Supreme Court took pains to emphasize that those decisions “are still subject to statutory stare decisis despite [its] change in interpretive methodology.”
It’s not entirely clear what that means in practice. But even assuming that pre-Chevron decisions are back on the table, the only cases that would present a real risk of flipping are those where: the statute was silent or ambiguous at step one; the agency’s interpretation was reasonable at step two; and the agency’s interpretation of the statute was reasonable, but not the best. Not every decision would be safe, but neither would every decision be in mortal peril.
Number 2: Do consider whether existing rules are worth challenging.
That said, it’s not entirely clear what this guarantee of “statutory stare decisis” actually means. At its narrowest, it simply means that parties can’t seek to reopen a particular case decided under Chevron just because it was decided under Chevron.
But what if the same statutory-interpretation question arises in a new context? What if the agency changes position on an interpretation previously blessed under Chevron? We expect we’ll see lots of discussion about this in the weeks and months to come as litigants and courts struggle to make sense of this language.
While we work to sort that out, however, now is a great time to reassess whether to challenge existing rules or prior statutory interpretations. Most Chevron cases were decided at step two—studies put the numbers around 50% to 70%—meaning that if there’s a particular decision you dislike, odds are that it’s worth considering whether to revisit it.
And the Supreme Court’s decision in Corner Post—which will issue July 1—could also make that substantially easier than it was before. Previously, the APA’s general six-year statute of limitations might have posed a hurdle for many older rules, but the Supreme Court is considering in Corner Post whether to authorize a workaround to that general rule.
If a potential Corner Post exception doesn’t apply, you can also petition the agency to reconsider or reopen an older rulemaking. You can also disobey the rule and challenge its substance as a defense to an enforcement proceeding, but that approach carries with it additional risks.
Number 3: Don’t expect the agency to defend its prior approach.
One feature of Chevron was that agencies could select among a range of “reasonable” interpretations, meaning that statutory interpretations changed with the administrations. As Chief Justice John Roberts wrote for the court, “Chevron foster[ed] unwarranted instability in the law, leaving those attempting to plan around agency action in an eternal fog of uncertainty.”
Now, there is only one best interpretation, and the court will decide what that is. If the agency leadership disagrees with the prior administration’s policy approach, don’t necessarily expect the agency to argue that the prior interpretation is the “best” one if challenged in court.
That means that litigation monitoring is even more crucial now. If a rule affecting your organization is challenged in court, think carefully about whether to intervene in support of the agency’s interpretation. Sitting on your hands now could prove problematic later if the agency switches course.
Number 4: Do reassess your approach to comment letters, focusing on the best interpretation of the statute.
Comment letters can no longer rely on policy arguments to drive statutory interpretation. Agencies will now need to assess the best interpretation and adopt that approach or adopt the one that best serves their policy goals from the range of possible court outcomes.
That means agencies—and, in turn, commenters—must pay closer attention to things like dictionary definitions, plain meaning, canons of interpretation, statutory structure, and (in some courts) legislative intent. Comment letters that raise these kinds of arguments will be more useful to agencies and more advantageous in future litigation.
Number 5: Do think creatively about your approach to administrative procedure litigation—including the long game.
Think critically and creatively about other frontiers in administrative litigation. For example, the major questions doctrine and non-delegation doctrine could warrant more space in briefs now that Chevron is gone. Under the major questions doctrine, agencies can only regulate issues of “vast economic and political significance” if Congress clearly and explicitly delegated that power. And four justices have already signaled their support for a stronger version of the non-delegation doctrine, which governs when Congress can delegate power to the other branches.
Litigants should look for ways to further push the already “fuzzy” line between legislative rules (which are subject to notice-and-comment) and interpretive rules (which are not). Chevron incentivized agencies to use notice-and-comment procedures because only notice-and-comment rules were generally eligible for deference.
Without deference, agencies will likely look more to less-formal processes with increasing frequency. Consider arguing that the agency’s supposed “interpretive” rule is actually legislative and impermissibly skipped the notice-and-comment process.
Finally, lawyers should think carefully about where to file suit, and be prepared for the possibility of circuit splits and the need for Supreme Court review. Although the US District Court for the District of D.C. is often still the best bet for district-court APA litigation, it’s worth looking beyond the capital for circuits that may be receptive to your arguments.
And with more cases being filed in more circuits challenging the same rules, the long game—setting up and pursuing splits to the Supreme Court, if necessary—will become more important than ever.
The cases are Loper Bright Enterprises v. Raimondo, No. 22-451, and Relentless v. Department of Commerce, No. 22-1219, decided 6/28/24.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.
Author Information
Sean Marotta is partner at Hogan Lovells and has argued at the Supreme Court and in state and federal courts across the country.
Danielle Desaulniers Stempel is a senior associate in Hogan Lovells’ Supreme Court and Appellate practice group, where she regularly litigates administrative-procedure cases.
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