The Supreme Court Reined in Federal Regulators. What Happens Now?

The Court this year reversed Chevron, a decades-old precedent giving bureaucrats deference over judges when the law is ambiguous.

In 1984, the Supreme Court issued a unanimous ruling in favor of an Environmental Protection Agency (EPA) rule stemming from the Clean Air Act. The EPA rule allowed states to treat all pollution from a unified industrial group as a singular pollution source for regulatory purposes. A cohort of environmental groups challenged the rule, arguing that it allowed pollution-emitting devices to operate that would not have passed regulatory muster considered on their own.

It was a technical exercise in statutory interpretation—but the case's long-term impact had little to do with pollution or the intricacies of the Clean Air Act. Embedded in that decision, Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., was a small revolution in administrative law.

Under the Administrative Procedure Act (APA), which governs regulatory agencies, courts are instructed to litigate agency rules by interpreting relevant statutes themselves. But Chevron created a new standard: If a statute was ambiguous, courts had to defer to the agency's interpretation. This became known as "Chevron deference."

Chevron deference seemed reasonable enough on its face. Regulatory statutes and the rules that stem from them are quite intricate, the thinking went, and require subject-matter expertise to understand. Courts were instructed to defer to agency interpretation because agencies had technical staff with domain-specific knowledge.

But over time, Chevron deference became a mechanism for expanding the power of executive agencies. If an agency wanted to take some action not clearly authorized by statute, agency lawyers could hunt for a seemingly ambiguous statute, then tell courts that the agency's new, extrastatutory power was implied by the law's vague language.

The courts, which were designed partly as a check on executive overreach, had tied their own hands. Bureaucratic power expanded in the four decades that followed Chevron as courts were obligated to accept agency interpretations.

The reign of Chevron deference came to an end this summer. In a 6–3 decision written by Chief Justice John Roberts, the Supreme Court overruled Chevron, declaring that it violated the APA. Writing for the majority in the case of Loper Bright Enterprises v. Raimondo, Roberts wrote that the act "requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority." Moreover, "courts may not defer to an agency interpretation of the law simply because a statute is ambiguous."

What happens next? The most likely immediate outcome is a modest trimming of executive overreach, as agencies will no longer feel quite so emboldened to justify dubious actions with statutory ambiguity. In some instances, courts may still give agency interpretations a thumbs-up. Case Western Reserve University law professor Jonathan Adler has noted that the ruling does not instruct judges to ignore agency interpretation; it merely removes the command to defer to them when the underlying statute is ambiguous and the interpretation is reasonable. Loper Bright, in Adler's formulation, eliminates Chevron's requirement of judicial deference and replaces it with judicial respect.

In the long term Loper Bright's most significant impact may be on Congress. To some degree, the expansion of executive power that Chevron enabled came at the expense of the legislative branch. In recent decades, Congress has sometimes decided to off-load its constitutional responsibilities to executive agencies, granting them the power not merely to carry out the law but to write it through the rule-making process. After all, agency rules are not suggestions or guidelines—they have legal force, just like the laws passed by Congress. But unlike the laws passed by Congress, voters have no direct recourse over bureaucrats writing regulations. Loper Bright should, or at least could, help restore some democratic accountability to the federal government.

But does Congress truly want to claw back the power it's delegated to the executive? In a July panel at the American Enterprise Institute on the aftermath of Loper Bright, Pat Toomey, a former GOP senator from Pennsylvania, suggested that some in Congress may not want that accountability; it might hurt them at the ballot box. In government, the desire for power often coincides with a determination to avoid accountability.