Losing the Chevron Deference: Implications for Economic Regulation
In June of 2024, the Supreme Court of the United States decided Loper Bright Enterprises v. Raimondo, overruling the Chevron deference. The Chevron doctrine had required that the courts defer to the reasonable interpretation of federal agencies when statutes are determined ambiguous. The doctrine was crucial in helping the execution and functioning of federal administrative law. The Chevron deference permitted agencies to make decisions within their jurisdiction given their specialized knowledge on certain statutes. Loper Bright brought a large departure from established constitutional legal principles with profound implications for economic regulation in the United States. In this paper, I contend that the Supreme Court’s abolition of the Chevron deference serves to undermine the effectiveness of regulatory processes by hampering the ability of agencies from making well-informed decisions, creating disruptions to the process of applying economic regulations.
The Chevron deference was established in the Supreme Court decision in *Chevron U.S.S., Inc. v. Natural Resources Defense Council, Inc. *(1984), endorsing a two-step test for federal agencies to use when reviewing the specifics of ambiguous federal statutes. In the first step, if the statute was determined to be clear, then the court’s decision used the clear interpretation. The second step came in the case that the meaning of the statute was unclear. Then, the court had to request the interpretation of an agency. Given the agency’s expertise on complex regulatory matters, it was determined that courts had to defer to the interpretation of the agency.
For nearly four decades, Chevron deference had been a cornerstone of administrative law, particularly in areas involving economic policy, environmental regulation, and financial oversight. Agencies such as the Environmental Protection Agency (EPA) and the Federal Reserve could operate with a certain degree of flexibility in implementing regulations, knowing that their expertise would be respected by the courts as long as their interpretations were reasonable. Future Supreme Court decisions, including *United States v. Mead Corp. *(2001) and *National Cable & Telecommunications Association v. Brand X Internet Services *(2005), further defined the Supreme Court decision. Mead narrowed the definition of the application of the Chevron deference by emphasizing that it applies only when Congress has delegated jurisdiction over the specific law in question. *Brand X *established that the courts must defer to the agencies in the case of ambiguous decisions—if the interpretations are reasonable—even if the court historically held a distinct interpretation of the statute. *FDA v. Brown & Williamson Tobacco Corp. *(2000), additionally established the importance of Congressional jurisdiction, and the limitations of the Chevron deference, arguing that the FDA’s interpretation of tobacco regulation would not be consulted because the economics of tobacco had established the assumption that Congress should have been more explicit in determining whether or not the FDA had power over questions surrounding the trade of tobacco. The Supreme Court’s decision in Loper Bright has eliminated this deferential standard, upending a well-established framework for administrative decision-making.
Following the decision, over almost four decades, the Chevron deference was widely regarded as a crucial pillar of administrative law. It was particularly essential in helping to resolve matters involving economic policies, environmental regulation, and government finances. Agencies like the Federal Reserve and the Environmental Protection Agency (EPA) had certain approved flexibility to interpret and implement the regulations, a symbol of trust between the courts and the agencies. However, with Loper Bright, the Supreme Court has determined that this practice is obsolete. The majority opinion of the court decided that the Administrative Procedure Act (APA) rendered the Chevron deference unconstitutional.
The Supreme Court’s decision reflected a trend of the court in the past decade to reduce the discretionary powers of federal agencies. The implications of the removal of the Chevron deference are severe, as agencies and litigating parties will have to navigate an unpredictable political and economic landscape in which the interpretations of the federal court are more likely to receive challenges in the courts.
A crucial goal and initiative of administrative law is to provide clear, effective, and efficient mechanisms through which regulation may be applied. Bringing the responsibility of interpretation to courts themselves increases the likelihood of litigation between parties, since the issue of interpretation would have been delegated to the appropriate agencies. The increase in judicial interference on decision-making is certainly a risk to regulatory decision-making given the expertise that agencies hold in dealing with specific regulation matters. Additionally, federal agencies hold the profound benefit of carrying institutional knowledge, which is particularly helpful in labeling recurring issues as well as adapting to new challenges. Courts may not have the appropriate intellectual capital to make the best decision in interpreting federal courts.
Let us consider several examples in which granting interpretive and discretionary powers can prove tricky, and potentially harmful. In the context of economic policy, agencies like the SEC, Federal Reserve, and CFPB are dedicated to interpret the complex and jargon-filled statutes that determine how we govern our markets, banks, and the protection of consumers. Now, the federal government runs the risk of a generalist judge making an interpretive decision on financial matters of which the judge may hold extremely limited knowledge. Similarly, courts are not equipped with the sufficient scientific studies or equipment to effectively respond to broader implications of environmental policy.
The Supreme Court’s ruling also raises concerns about the manner in which existing regulations will be addressed. Many regulations, and agencies themselves, have been outlined and organized in the context of applying the Chevron deference. Given that the Chevron deference no longer applies, labor laws, financial regulations, and so many other realms formerly lent to agencies will be subjected to active legal challenges by litigants who disagree with the courts’ interpretations. Additionally, agencies are less likely to push their own regulatory efforts if they are at the mercy of the whims of judges with only tangential connections to the regulatory concerns.
Ultimately, while judicial oversight is an essential check in ensuring the legality of an agency’s actions, the *Loper Bright *decision shows a step back in the execution of impactful economic regulation. As economic concerns in the United States continue to complicate themselves, the loss of the Chevron deference will certainly be an interesting factor to consider.
Footnotes
Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. 467 U.S. 837. Supreme Court of the United States, 1984.
FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120. Supreme Court of the United States, 21 Mar. 2000.
Loper Bright Enterprises v. Raimondo, 603 U.S. ___ (2024). Supreme Court of the United States, 28 June 2024. https://www.supremecourt.gov/opinions/23pdf/22-451_7m58.pdf.
National Cable & Telecommunications Ass'n v. Brand X Internet Services, 545 U.S. 967 (2005). https://www.supremecourt.gov/opinions/04pdf/04-277.pdf
Sohoni, Mila. "Chevron's Legacy." Harvard Law Review Forum, vol. 138, Jan. 2025.
United States v. Mead Corp., 533 U.S. 218. Supreme Court of the United States, 18 June 2001.