On June 28, 2024, Supreme Court of the United States overruled its forty-year-old precedent established in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), which afforded deference to federal agencies in interpreting ambiguous federal statutes.  In Loper Bright Enterprises v. Raimondo, the Court released a 6-3 decision that held that judges are not required to defer to an agency’s interpretation of ambiguous statutes, and declared instead that the Administrative Procedure Act (APA) requires courts to exercise independent judgment in deciding whether an agency has acted within its statutory authority.  Despite overruling Chevron, the Court unequivocally stated that previous cases that relied on Chevron are not overturned.

Previous Chevron Deference Era

The “Chevron deference” doctrine arose from the 1984 Supreme Court decision in Chevron U.S.A. v. NRDC, in which the Court established a two-step analysis to determine whether an agency’s action was within the scope of its statutory authority.  Specifically, under Chevron, courts first assessed whether “Congress ha[d] spoken to the precise question at issue.”  If there was no ambiguity in a statute and the intent of Congress was clear, the statute controlled.  However, if a statute was “silent or ambiguous with respect to the specific issue at hand,” courts would defer to an agency’s reasonable interpretation of the statute, even if the reviewing court would not have reached the same conclusion if the question initially was presented before it in a judicial proceeding.

The New Era – Loper Bright

In Loper Bright, the Court held that the deference the Chevron doctrine requires of courts reviewing agency action is not consistent with the limits of the APA, which specifies that courts, not agencies, will decide “all relevant questions of law” arising on review of agency action, 5 U.S.C. § 706, including those involving ambiguous laws.  The Supreme Court noted that the APA does not prescribe any deferential standard for courts to employ in reviewing agency action, and, by directing courts to “interpret constitutional and statutory provisions” without differentiating between the two, 5 U.S.C. § 706, it makes clear that agency interpretations of statutes are not entitled to deference.  The Court then overruled the Chevron doctrine in order to “ensure that the law will not merely change erratically, but will develop in a principled and intelligible fashion,” quoting Vasquez v. Hillery, 474 U.S. 254, 265 (1986).  Despite overturning Chevron, the Court indicated that lower courts could still give weight to a federal agency’s interpretation of statutes, but are not required to defer to a federal agency’s interpretation.

Justices Thomas and Gorsuch filed lengthy concurrences defending the majority’s opinion.  Justice Kagan, joined by Justice Sotomayor and Justice Jackson, dissented.  The dissent argues that Chevron deference reflected Congressional intent that agencies be allowed to fill in the details of broadly worded statutes and thus was itself rooted in a presumption of legislative intent.  The dissent argues that Congress would usually prefer that agencies, which are subject matter experts, rather than generalist judges, fill the gaps in interpretive issues arising in the regulatory context.  

Response by the Federal Energy Regulatory Commission

In a press release issued July 1, 2024, the Chairman of the Federal Energy Regulatory Commission (FERC), Willie Phillips, opined that the Supreme Court’s decision in Loper Bright will not affect FERC’s authority to regulate regional transmission planning and cost allocation under FERC’s recently-issued Order No. 1920, which adopts reforms for long-term regional transmission planning.

For more information, please contact: Wendy Reed (reed@wrightlaw.com), Wendy Warren (warren@wrightlaw.com), Matt Binette (binette@wrightlaw.com), Melinda Warner (warner@wrightlaw.com) and Krystal Tapper (tapper@wrightlaw.com).