On June 28, 2024, the United States Supreme Court (“Supreme Court”) overruled its prior decision in Chevron U.S.A. v. Natural Resources Defense Council (“Chevron”) in a 6-3 vote in Loper Bright Enterprises et al. v. Raimondo, Secretary of Commerce, et al. (“Loper Bright”). The Chevron doctrine has required federal courts to defer to administrative agencies’ interpretations of statutes the agency administers when the underlying statute is ambiguous. Under the Loper Bright ruling, federal courts will not defer to administrative agencies in interpreting ambiguous statutes and instead must exercise their judgment in determining whether the agency acted within its statutory authority. The decision will likely have a substantial impact on both regulated industries and federal agencies such as FERC.

In Chevron, the Supreme Court held that a reviewing federal court, when presented with a challenge of a federal agency’s interpretation of an ambiguous statute granting the agency authority, was required to defer to the federal agency’s interpretation of the statute so long as that interpretation was “reasonable.” Chevron gave federal agencies power to reasonably interpret their own statutory authority and largely let agency interpretations remain undisturbed by federal courts.

Changing that paradigm, Loper Bright interprets the Administrative Procedure Act (“APA”) to grant federal courts the power to interpret federal agency rules and orders when the statute is ambiguous. In Loper Bright, the Supreme Court held that the Chevron doctrine was inconsistent with the APA – the law that governs the process by which federal agencies develop and issue regulations – because interpreting what the law is should be a task for the judicial branch, not a federal agency that is a part of the executive branch. The Supreme Court emphasized the purported negative effects of federal courts deferring to federal agency interpretations under Chevron deference. The Supreme Court unequivocally overruled Chevron, stating “Chevron is overruled . . . . [C]ourts need not and under the APA may not defer to an agency interpretation of the law simply because a statute is ambiguous.”  While federal courts may consider an agency’s perspective or position, under Loper Bright they are unable to defer to the federal agency and must “exercise their independent judgment in deciding whether an agency acted within its statutory authority, as the APA requires.”  Additional information regarding the impact of the Supreme Court’s decision can be found here.

The Supreme Court’s decision in Loper Bright, Case No. 22-451, is available here.