The Supreme Court’s Double Hammer to Agencies: Loper Bright and Corner Post Set New Precedents for Challenging Federal Agency Action

Overview

On Friday, June 28, 2024, the U.S. Supreme Court overruled Chevron U.S.A. v. Natural Resources Defense Council (“Chevron”)^[1] in Loper Bright Enterprises v. Raimondo (No. 22-451) and Relentless v. Dep’t of Commerce (No. 22–1219)^[2] (the two cases collectively referred to as “Loper Bright”), bringing an official end to the decades-old and eponymously named “Chevron deference” doctrine. Not content to stop there, the Court returned fresh to work Monday, July 1, to, in Corner Post, Inc. v. Board of Governors of the Federal Reserve System (No. 22-451)^[3] (“Corner Post”), effectively extend the limitations period to challenge final agency actions under the Administrative Procedure Act (“APA”).

To be sure, these are important decisions that bear on the work of federal agencies and ultimately affect the rights of regulated parties. But their importance may rest more in their chemistry than as individual holdings. For its part, Chevron deference has been waning for years. In cases involving the most consequential regulatory efforts, the courts have employed the so-called major questions doctrine to require clear statutory delegations of authority to support agency action perceived to be of significant economic or political consequence. Lacking that—and in many cases no clear delegation exists—the courts have avoided or ignored appeals to deference. Nevertheless, to quote the concurring opinion of Justice Gorsuch, Loper Bright “puts a tombstone” on Chevron deference so that no lower court will mistake it for still being alive.

Meanwhile, Corner Post invites new market entrants (corporations, associations, public interest groups, and individuals alike) to challenge nagging regulations long after their promulgation. This combination of eliminating deference and enlarging the limitations period ushers in a fertile era to challenge regulations, and in particular to take a fresh look at older regulations previously challenged but upheld on deference grounds.

The following analysis summarizes key points from the Court’s opinions and flags various uncertainties that lie ahead in a variety of regulated areas. 

Background on Chevron

In Chevron, the Supreme Court instructed courts to defer to agency interpretations of ambiguous statutes they are charged by Congress to administer provided the interpretation is “permissible.” By “permissible” the Court meant reasonable, even if not the “best” interpretation. At the time, the deference principle articulated by the Chevron Court was favored by industry, serving as a check on lower courts, in particular the D.C. Circuit, perceived as too frequently requiring agencies to regulate more aggressively (as the D.C. Circuit had in fact done in that particular case). 

Chevron concerned a Reagan-era regulation of the Environmental Protection Agency (“EPA”) promulgated under the Clean Air Act. Notably, the EPA at the time was run by Anne Gorsuch, the mother of future Supreme Court Justice Neil Gorsuch. The regulation dealt with pollution from smokestacks and when and under what conditions a new permit was needed. The interpretive question at the center of the case was the meaning of “stationary source”—did Congress, in crafting the Clean Air Act, mean a single smokestack (which would have meant any installation of, or modification to, a single smokestack would require permitting), or did it mean a single power plant, even if that plant had multiple smokestacks (thus allowing power plants to make modifications to, or even replace or install, a smokestack without the need to obtain a new permit so long as the alteration did not increase the overall total emissions of the plant). EPA adopted the latter the view—the so-called “bubble” concept—by which all smokestacks within the same “industrial grouping” (i.e., power plant) were deemed to be part of one “stationary source.”

Environmental groups, viewing the rule as a free pass to power plants to pollute and thus at odds with the goal of the Clean Air Act to improve air quality, sued EPA to block the rule. The D.C. Circuit agreed and set aside the regulation. In reversing, the Supreme Court articulated a two-step approach to statutory interpretation: (1) a court first uses the traditional tools of statutory construction to determine whether the statutory provision at issue is clear, in which case the agency must abide by the statute’s clear terms, or ambiguous (“Step One”); (2) if the court determines at Step One that the language is ambiguous, it must defer to the agency’s interpretation of the statute so long as that interpretation is reasonable (“Step Two”).^[4] In practice, Step Two meant courts were to uphold agency action even if they did not agree that the agency’s decision was the best one, so long as the decision was based on a permissible reading of the statute. Finding the meaning of “stationary source” ambiguous, the Supreme Court upheld EPA’s interpretation of the Clean Air Act on Step Two grounds.^[5]

According to the Court, Congress had implicitly delegated authority to EPA to resolve the statutory ambiguity, and it was not for the courts to substitute their own interpretation for that of the agency. These were, the Court said, questions of “policy” and the courts “have a duty to respect legitimate policy choices” made by the “expert” agencies that implement them.^[6] Industry loved it; environmentalists loathed it. How times change.

When decided, Chevron was not the blockbuster it became in later years. Its unexpected prominence and potency as precedent came about as it became more widely applied, in particular by the D.C. Circuit and other courts that routinely review agency actions under the APA and other statutes. But one’s embrace of Chevron’s logic of requiring deference to agency interpretations of ambiguous statutory provisions was directly impacted by the regulatory priorities of the party occupying the White House. As should have surprised no one, although advantageous during the Reagan administration, Chevron deference proved less appealing to industry when the White House was in the hands of presidents and agency heads with more ambitious regulatory agendas. In no small sense, agencies came to leverage Chevron deference as a means to advance through the courts new policies that had the look and feel of new law, with the significant benefit of never having to persuade Congress to enact new legislation. 

Chevron’s defenders insisted deference was merely honoring Congress’ implied choice, as the nation’s lawmaking body, of delegating “gap-filling” authority to the executive branch. The doctrine’s critics, in contrast, viewed Chevron as giving agencies too much power and control at the expense of Congress and the courts. The Chevron rationale was also criticized for being inconsistent with the APA, which directs the courts to “decide all relevant questions of law.” Chevron, the critics stressed, never even cited the APA (although that is perhaps because the case arose under the Clean Air Act, which has its own judicial review provision).

Deferential Review Replaced by De Novo Review

In time, the cacophony of critics decrying Chevron deference as inconsistent with the hoary pronouncement of Justice Marshall in the early days of the Republic that “it is emphatically the duty” of the courts “to say what the law is”^[7] became too much for the Supreme Court to let it stand. By the time certiorari was granted in Loper Bright, the outcome was a fait accompli.

The Loper Bright cases arose from challenges to the National Marine Fisheries Service’s interpretation of the Magnuson-Stevens Act as it pertains to a requirement that vessels carry federal observers onboard and cover the costs of those observers’ presence. The agency adopted regulations requiring the private fishing vessels to pay those costs, and two lower courts upheld those regulations as “permissible” under Chevron Step Two. In both cases, the Court granted certiorari on the sole question of whether it should “clarify” or outright overrule Chevron.

In deciding Loper Bright, the Court joined Chevron’s critics, stating Chevron was a “marked departure from the traditional approach”^[8] and that “[t]he deference that Chevron requires of courts reviewing agency action cannot be squared with the APA.”^[9] Prospectively, all that matters is whether the agency’s interpretation is the “best” interpretation of the statute. If it is not, the action resting on that interpretation cannot stand. In Loper Bright, the Court did not actually decide whether the agency’s interpretation of the Magnuson-Stevens Act was the “best” one—that is a question for the lower courts on remand.

In essence, Loper Bright supplants Chevron deference with de novo review of all questions of statutory interpretation.^[10] The Court held that “by directing courts to inter­pret constitutional and statutory provisions without differ­entiating between the two, Section 706 [of the APA] makes clear that agency interpretations of statutes—like agency interpreta­tions of the Constitution—are not entitled to deference. Un­der the APA, it thus remains the responsibility of the court to decide whether the law means what the agency says.”^[11] In overruling Chevron, the Court held that, “[c]ourts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the APA requires.” To be sure, “[c]areful attention to the judgment of the Executive Branch may help inform that inquiry. But courts need not and under the APA may not defer to an agency interpretation of the law simply because a statute is ambiguous.”^[12]

The Impact of Loper Bright: More Emotional than Material

In one respect, the practical importance of Loper Bright correlates directly with whatever lingering importance Chevron deference had on any particular agency action prior to the Loper Bright decision being announced. For example, if the government was defending a regulatory action in court on Chevron Step Two grounds, that defense is now in jeopardy. But the cases in which federal agencies were relying on a Chevron Step Two defense were already far fewer in number than they were in years past precisely because of the growing judicial hostility toward Chevron.

Thus, while certainly historic in its overruling of Chevron, the immediate practical impact of Loper Bright is muted somewhat by the reality that Chevron deference was already long on the wane. The Supreme Court had not relied on the doctrine to decide a case since 2016, and the rise of the major questions doctrine had already done much of the hard work on restraining large-scale regulatory efforts (of major economic and political consequence) for which statutory authority was not expressly given.

For example, in West Virginia v. EPA, the Court held that the Clean Air Act did not grant EPA the authority to effectively dictate how the nation’s power producers generate electrical power.^[13] Similarly, the Court struck down the Occupational Safety and Health Administration’s effort to require COVID-19 vaccines for much of the country’s workforce, holding that Congress did not expressly delegate that authority to the agency under the Occupational Safety and Health Act.^[14]

In this regard, much like throwing out an old pair of shoes long kept in the back of a dark and rarely opened closet, Loper Bright merely punctuated what the Supreme Court had been signaling for years. And practically speaking, this was already evident: agencies and government litigation counsel alike have relied less and less on Chevron deference over the last few years to justify agency regulations. To be sure, it still happened, and the lower courts were still employing Chevron to varying degrees to decide cases (as the Loper Bright cases exemplify), but many court watchers had come to see Chevron as effectively on life support.

In another important respect, though, Loper Bright might be expected to give an adrenaline boost to judicial skepticism about perceived agency overreach. In addition to cementing the straightforward “best interpretation” standard for statutory interpretation, Loper Bright is judicial balm for the critics of Chevron who for years chafed at the advantage it gave government litigating positions. And, sure enough, already in the days since the decision was issued, lower court opinions, citing Loper Bright, have arguably gone out of their way to emphasize the government is not entitled to deference, even in cases where the government was not relying on deference in the first place.

Furthermore, as described below in the sections addressing the impacts of Loper Bright and Corner Post on particular regulated areas, the ramifications stemming from Loper Bright may well vary depending on the regulatory ambitions of the given agency. The more ambitious a regulation is against the backdrop of the statute relied upon by the agency for its authority, the greater the headwinds we might expect from Loper Bright—whether from the holding itself or the spirit of judicial skepticism it embodies.

Loper Bright Marks an End to Agency Flip-Flopping

Perhaps as noteworthy as the overturning of Chevron is what the official end of Chevron deference means for agency policy-making when a new administration of a different political party enters office. A corollary of Chevron deference under Step Two was that agencies were not bound by prior interpretations of statutes, even where those prior interpretations had been challenged and upheld by the courts on deference grounds. That is because, by definition, a “permissible” interpretation is not tantamount to the “best” interpretation, and so a court decision blessing an agency position on deference grounds alone did not carry with it stare decisis effect as to that particular interpretation.

Thus, nothing stopped a new administration of a different party with different priorities to revisit and discard older interpretations. In this regard, without any statutory modifications by Congress, agencies were at liberty to reinterpret the same statutes to yield fundamentally different regulatory outcomes—it was not uncommon for agencies to reach the polar opposite interpretation, frequently for political reasons.^[15] For example, in National Cable & Telecommunications v. Brand X Internet Services (“Brand X”),^[16] the regulated party disputed the FCC’s construction of the term “telecommunications service” because “the Commission’s interpretation [was] inconsistent with its past practice.”^[17] Applying Chevron, the Court held that the FCC’s construction of the Communications Act was lawful,^[18] no less than its original interpretation. And this was so even if that prior interpretation had been upheld on Chevron Step Two grounds.^[19]

By jettisoning Chevron deference, the era of agencies flip-flopping with each new administration should seemingly also come to an end, eventually if not immediately. Brand X is implicitly abrogated, at least where a court of appeals or the Supreme Court renders judgment on the “best interpretation” of a statutory provision being interpreted by the agency whose action is being challenged. Any such decision by a circuit court of appeals or the Supreme Court will necessarily carry with it stare decisis effect (district court decisions will of course remain merely persuasive authority for everyone but the affected parties). Once done, at least within those jurisdictions that have rendered holdings, an agency will not be able to enforce a regulation that is based on any inconsistent interpretation. This may also impact regulatory affairs strategies. Whereas, under the Chevron/Brand X paradigm, stakeholders would routinely meet with agency decision-makers to lobby for flip flops when administrations friendlier to the issue of the day came into office, this style of advocacy should prove far less fruitful in light of Loper Bright.    

It will also, in turn, lead to interesting choices by agencies as to how to implement programs where one or more courts have rendered holdings as to the “best interpretation” of a particular statute—will agencies acquiesce to unfavorable decisions in the interest of national uniformity? And while federal law mitigates against the risk of multiple appellate court decisions on pre-enforcement review of regulations,^[20] the potential exists in district court APA actions or enforcement scenarios for two or more lower courts to reach different conclusions. Obviously, the Supreme Court can clarify the “best” interpretation for nationwide application, but it takes time for cases to reach the Supreme Court, if they ever do, and meanwhile agencies will need to grapple with programmatic enforcement. Absent resolution from the Supreme Court, agencies may more frequently be left to carry out fragmented regulatory programs (which raises its own set of interesting issues). Agency acquiescence or non-acquiescence is not a new concept, but it may well become thornier post-Chevron.

The End of Agency Deference Does Not Mean the Agency Loses

No one should mistake the end of Chevron deference as synonymous with the end of the administrative state. And nothing in Loper Bright means that, post-Chevron, agencies are destined to lose in litigation and that regulations will never be upheld. Far from it. 

A 2022 decision, Becerra v. Empire Health Foundation, illustrates the point. The Court granted certiorari in Empire Health to resolve a circuit split on how to interpret a provision of the Medicare statute. Even though the circuit split was the result of differing views on how much, if any, deference to give to the interpretation of the U.S. Department of Health and Human Services (“HHS”), the court decided the case without any reference to Chevron deference. In competing opinions over what everyone agreed was ambiguous statutory text, the majority said HHS’s interpretation “best implements the statute’s bifurcated framework,”^[21] while the dissent said “HHS’s ... interpretation is not the best reading of this statutory reimbursement provision.”^[22] What should be immediately apparent to even the casual reader is how that statutory analysis presaged—two years earlier—exactly what Loper Bright now requires. Equally noteworthy is the make-up of the majority: Justices Thomas and Barrett joined Justices Breyer, Kagan, and Sotomayor. Point being: provided agencies do their work and tie their regulatory efforts to the text of their governing statutes, nothing in Loper Bright says agencies will not prevail in litigation.

Indeed, the Loper Bright Court reiterates the longstanding rule of thumb that agency interpretations are still entitled to “respect.”^[23] To be sure, the Court does not expound on what “respect” means, but the term already has an established pedigree that predated Chevron. In Skidmore v. Swift & Co., the Court held that while the courts have the authority to decide all questions of law, they also must give appropriate weight to an agency’s interpretation of the statute.^[24] Under Skidmore, “[t]he weight of such a judgment in a particular case will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.”^[25] While largely tautological, the Skidmore principle suggests that courts may still lean on agency experience and expertise in close cases, at least where the interpretation is imbued with a policy choice.

Of course, as Justice Kagan observed in her Loper Bright dissent: “If the majority thinks that the same judges who argue today about where ‘ambiguity’ resides ... are not going to argue tomorrow about what ‘respect’ requires, I fear it will be gravely disappointed.”^[26] One thing is certain: APA and constitutional law litigators will remain busy.

Corner Post: What’s Old Is New Again

For all the talk of Loper Bright, the bigger immediate impact in administrative law may be the Corner Post decision. There, a truck stop that opened for business in 2018 challenged under the APA certain regulations of the Federal Reserve Board that place limits on the fees banks may charge merchants for debit-card purchases (as a merchant, the truck stop’s complaint was that the bank fee limits were too high because they allowed banks to collect costs that the authorizing statute prohibited). The regulations were promulgated in 2011, and so the lower courts had dismissed the lawsuit—which the truck stop joined in 2021—on grounds the 6-year limitations period applicable to APA claims had expired. The Supreme Court reversed, holding that limitations period does not begin to run for a particular plaintiff until a claim accrues with that plaintiff. Since the truck stop only came into creation in 2018, its 2021 lawsuit was timely.  

Given the elimination of Chevron deference and the extended period for new entrants to challenge older regulations, there is chatter that the Supreme Court has opened the floodgates to new litigation over old matters. As Justice Jackson put it in her Corner Post dissent, “this much is clear: The tsunami of lawsuits against agencies that the Court’s holdings in this case and Loper Bright have authorized has the potential to devastate the functioning of the Federal Government.”^[27]

Again, though, nothing in Corner Post means those late entrants will succeed in setting aside older regulations. The majority opinion emphasizes this point.^[28] So especially if the regulation was previously upheld, even if only on deference grounds, that precedent will exist at least as persuasive authority. New entrants will, like any other putative plaintiff, need to make the same business decision as to whether the court fight is worth the investment.

Potential Gray Areas Remain

The Loper Bright Court limited its holding to whether Chevron was consistent with the APA—it did not go so far as to say whether Congress could, by statute, require courts to defer. As a practical matter, it is unlikely Congress would amend the APA any time soon to do just that, and there are certain comments in the majority decision, as well as the concurrence of Justice Thomas, to suggest it could not under separation-of-powers principles. That said, because Loper Bright’s holding is limited to what the APA requires, it does not by its own terms control cases where judicial review is brought under other statutes. In fact, the Court said that “when a particular statute delegates authority to an agency consistent with constitutional limits, courts must respect the delegation, while ensuring that the agency acts within it.”^[29]

The Court also distinguished review of agency findings of fact based upon evidence in the administrative record,^[30] as well as regulatory pronouncements based on express delegations of authority, which are subject to review under the APA’s inherently deferential substantial evidence or arbitrary and capricious standards, depending on the specific context.^[31] Less clear is how the courts are to treat so-called “mixed questions of law and fact”—while the majority suggested those questions are not within the scope of its opinion, the dissent found that doubtful.^[32]

In any event, big questions remain:

• Does the Constitution limit Congress’s ability to amend the APA to require courts to defer? Justice Thomas clearly thinks so, and it would seem a majority would likely so hold if Congress tried.
• To what extent may Congress delegate decision-making discretion to agencies? On July 2, the day after the Court issued its final opinions of this term, it declined to review a lawsuit challenging Congress’s authority to delegate standard-setting discretion to the Occupational Safety and Health Administration under the non-delegation doctrine.^[33] Justice Thomas dissented from the denial of certiorari and it would seem the appetite is growing in the Court to revisit the Court’s non-delegation doctrine precedent now that Chevron is out of the way.^[34]
• What does Loper Bright mean for challenges to agency interpretations of statutes where the APA does not govern the litigation, for example where a party is defending against an enforcement action? One might presume the same principle applies: statutory interpretation is for the courts. But by its terms Loper Bright only addressed what the APA requires, which is a bit peculiar since, as noted, Chevron itself did not arise and was not decided under the APA.
• The majority states that prior decisions upholding agency interpretations under the Chevron framework remain good law,^[35] but can that really be so? A Step One decision would have stare decisis effect, but a Step Two decision is by definition not binding on anyone—the courts or the agency.^[36] In light of Corner Post, it should be assumed that older decisions based solely on Step Two grounds are ripe to be revisited in new challenges.
• Is anything left of Kisor (Auer) deference? In Kisor v. Wilkie,^[37] the Supreme Court substantially pared back, but did not kill off, so-called Auer deference,^[38] the related doctrine of deferring to an agency’s interpretation of its own ambiguous regulation. But in light of the Loper Bright Court’s pronouncement that the courts are to decide “all relevant questions of law” under the APA, it is difficult to see how the Kisor/Auer line of cases have any life left.

In the sections that follow, we aim to identify timely and topical issues that particular agencies and program stakeholders will need to work through in the weeks, months, and years to come as the administrative state adjusts to Loper Bright and Corner Post (to say nothing of other decisions of import to administrative law and litigation^[39]).

Labor and Employment

Regulatory actions taken by the agencies that enforce federal labor and employment laws will be at the vanguard of litigation testing the reach of Loper Bright; within days (even hours) of the Court’s decision, at least two federal district courts relied on Loper Bright to enjoin recently promulgated agency rulemaking.^[40] As a general matter, Loper Bright will likely be seen as a significant mid-course correction in the law rather than wholesale deregulation of agency enforcement of labor and employment laws. Regulations issued by the three principal federal agencies most active in this area raise different scenarios that may lead to varying results in subsequent litigation.

Because the National Labor Relations Board (“NLRB”) acts primarily through adjudication, Loper Bright is unlikely to cause a material change in how such cases are resolved. As noted, the Court is clear in stating that its burial of Chevron has no impact on the courts’ prerogative to rely on agency interpretations of their organic statutes under Skidmore. This may suggest there will be fewer successful challenges to previous Supreme Court decisions interpreting federal labor law based solely on Loper Bright. In what can be viewed as a comparatively generous application of Skidmore, numerous Supreme Court decisions have held that the National Labor Relations Act gives authority to the NLRB to both make and revise national labor policy by adopting “permissible interpretations” of that act, to which the courts generally accord “considerable deference.” Loper Bright may therefore not provide much traction for challengers to this precedent, much of which was announced decades before Chevron. More recent NLRB decisions adopting substantial changes in the business community’s settled understanding of labor law principles will be more vulnerable, however, particularly from judges who adhere to modern rules of statutory interpretation including the clear statement rule and the major questions doctrine. As with other agencies, many courts will be unsympathetic to changes in enforcement positions that are perceived as being driven by agency policy objectives not grounded in statutory text.

NLRB rulemaking initiatives present a different situation. The NLRB rarely engages in rulemaking, in part because of a lack of specific congressional authorization. The current challengers to the NLRB’s joint employer rule will surely rely on Loper Bright in pursuing their claims with arguments focused on statutory interpretation rules. The Loper Bright Court’s analysis suggests also that the NLRB will have a more difficult time justifying issuing new mandates through rulemaking, particularly in situations where new rules reverse previous reasonably settled understandings of settled law. 

By contrast, the status of rules implemented by the Equal Employment Opportunity Commission (“EEOC”) will be statute-specific. Courts generally have accorded only Skidmore deference to interpretative regulations promulgated by EEOC under Title VII, while rejecting arguments that “legislative” regulations will be given deference. The extent to which substantive regulations promulgated by EEOC under the other statutes are now more vulnerable is an open question.  Statutes such as the Age Discrimination in Employment Act (“ADEA”), the Americans With Disabilities Act (“ADA”), and the Genetic Information Nondiscrimination Act (“GINA”), as well as the recently passed Pregnant Workers Fairness Act and the PUMP Act, all include language that, to one degree or another, authorize EEOC to exercise discretion about the meaning of a statute by promulgating regulations. Loper Bright suggests interpretation and rules issued under such a delegation clause will be less vulnerable to attack. The EEOC’s recent rule implementing the Pregnant Workers Protection Act requiring accommodation of abortion requests may be vulnerable under Loper Bright. The challengers to that rule, which was preliminarily enjoined earlier last month by a district court relying principally on the major questions doctrine, may add Loper Bright to their quiver of legal arguments. Cases like this may well provide guidance on the question of the specificity of the congressional delegation of authority in the statute, a question that Loper Bright does not address. Nor does the Court say much about how courts should answer that question. The issue of how Loper Bright will affect sub-regulatory guidance issued by EEOC, as with many other agencies, is also an open question. 

Regulations promulgated by the various sub-agencies within the Department of Labor (“DOL”) are most likely to be subject to challengers relying on Loper Bright. The Wage & Hour Division’s current initiatives to address independent contractor definitions is an obvious candidate, particularly when paired with arguments based on statutory interpretation. DOL’s Office of Federal Contract Compliance Programs presents a particularly interesting question that is likely to be litigated. Some of its principal regulatory initiatives are the product of Executive Orders rather than Congressional enactments. Bottom line: Less predictability; always bad for the business community. 

Health Care

As previously noted, Chevron deference was already on the wane in health care cases prior to Loper Bright. For example, the Eastern District of Texas did not consider Chevron’s Step Two when it set aside HHS’s “qualified payment amount” (i.e., median in-network rate) calculation rules for the federal No Surprises Act’s out-of-network health insurance dispute resolution process.^[41]

Nevertheless, Loper Bright is already impacting areas of law where health care agencies changed position on hot-button issues or implemented complex statutory requirements. For example, in its State of Tennessee v. Becerra decision on July 3, 2024,^[42] the Southern District of Mississippi cited Loper Bright when preliminarily enjoining the Biden administration from enforcing a rule that explicitly extended Affordable Care Act Section 1557’s health program antidiscrimination prohibition to protect gender identity and sexual orientation—an area of law where regulations often change depending on the party holding the presidency. Health care providers similarly have begun citing Loper Bright in suits challenging HHS’ calculation of Medicare disproportionate share hospital (colloquially known as “DSH”) payments, an issue where multiple circuit courts previously applied Chevron deference and the Supreme Court recognized that “the [statutory] language is downright byzantine.”^[43] 

Loper Bright also may impact impending federal regulations regarding the provision of mental health benefits. The Departments of Labor, Health and Human Services, and Treasury (the “tri-agencies”) may soon finalize proposed rules that will likely impose substantial data requirements for proving that health plans provide mental health benefits in a manner that is “comparable” to their provision of medical/surgical benefits under the federal Mental Health Parity and Addiction Equity Act of 2008 (“MPHAEA”).^[44] Moreover, MHPAEA and its regulations are frequently the subject of private litigation. Courts consequently could, in theory, decide whether certain of these tri-agency regulations represent Loper Bright’s “best interpretation” of MHPAEA without hearing from the agencies.

In each of these areas, and others like them throughout the health care space, Loper Bright could have a substantial impact. At a minimum, Loper Bright’s insistence on finding the single “best interpretation” and on respecting consistent or contemporaneous agency interpretations likely will curb agencies’ flexibility to implement their own, or more specifically, the particular presidential administration’s, preferred policies. And Loper Bright’s impact on Medicare payment rules could have even broader effects. Private health care payers often base in-network reimbursement rates on Medicare payment methodologies. Substantial confusion therefore could be introduced into the broader health care industry if courts split on what constitutes the single “best” interpretation of a complex Medicare reimbursement methodology.

Environmental and Energy

Although the Loper Bright Court instructs the federal courts “to leave Chevron behind,” it also said that “[b]y doing so, … we do not call into question prior cases that relied on the Chevron framework. The holdings of those cases that specific agency actions are lawful—in­cluding the Clean Air Act holding of Chevron itself—are still subject to statutory stare decisis despite our change in interpretive methodology.”^[45] As highlighted earlier in this article, however, it is questionable whether that could ever be true given the inherently non-binding nature of decisions upholding agency interpretations solely on Chevron Step Two grounds.

The Supreme Court has already vacated and remanded a number of pending decisions in light of Loper Bright. For example, on July 2, the Court granted certiorari, vacated the decision below, and remanded Edison Electric Institute v. FERC (No. 22-1246), instructing the D.C. Circuit to reconsider its decision applying Chevron (sub nom Solar Energies Industry Ass’n v. FERC, 59 F.4th 1287 (D.C. Cir. 2023)) and deferring to FERC’s decision that a 160MW solar project in Montana could be treated as a “qualifying facility” under the Public Utility Regulatory Policies Act even though it exceeds the Act’s eligibility limit because the proposed project can only add 80 megawatts to the grid.

Questions of statutory interpretation in environmental statutes not yet before the Supreme Court may also be affected by Chevron’s demise, whether imminently or sometime in the future:

• EPA and the U.S. Army Corps of Engineers’ latest attempt at defining what are “waters of the United States” (“WOTUS”) and therefore waters subject to federal regulation under the Clean Water Act is currently under review in multiple federal district courts. What constitutes a WOTUS (which is how the Clean Water Act defines “navigable waters”) has been debated to the Supreme Court and back numerous times since the 1980s, and the Court has continually struggled with defining the outer bounds of the agencies’ authority. Without Chevron deference as a touchstone, it may be emboldened to definitively interpret the statute. First, though, the agencies’ definition must wend its way through the lower courts, raising the prospect of numerous, potentially inconsistent, rulings. At issue, for example, is whether the agencies may include “interstate waters” within the definition, whether or not they are actually “navigable.”
• The Council on Environmental Quality’s recent updates to the regulations implementing the National Environmental Policy Act (“NEPA”) have also been challenged. Interpretations of the statute that may now be subject to higher scrutiny include, inter alia, CEQ’s authority to require an environmental impact statement to include a quantification of greenhouse gas emissions; and the addition of “Indigenous Knowledge” as a type of “special expertise” of cooperating agencies, where “special expertise” is term defined in NEPA. Interestingly, five years prior to the birth of the Chevron doctrine, the Court had already stated that “CEQ’s interpretation of NEPA is entitled to substantial deference.”^[46] Uncertain is whether statements such as these are also effectively overruled—at the very least, they seem called into question.
• The Clean Air Act, in particular, is a veritable gold mine of Chevron Step Two interpretations (as is evident by the fact that it gave birth to Step Two): The D.C. Circuit has deferred to EPA’s interpretation of terms and phrases like “nearby” and “on the basis of available information.”^[47] And the Clean Air Act, unlike some other statutes, requires EPA to regularly reassess and update its regulations. Each time EPA undertakes a new rulemaking, then, a prior interpretation may be up for grabs.

Tax and Employee Benefits

Loper Bright could impact interpretative issues concerning tax and employee benefits in important ways.

Prior to 2011, lower courts disagreed as to whether tax regulations were eligible for Chevron deference. After Supreme Court’s holding in Mayo Foundation v. United States, 131 U.S. 704 (2011), which clarified that Chevron did apply to tax regulations, the IRS was incentivized to use notice and comment rulemaking to obtain the advantageous Chevron deference treatment in court. The Treasury Department and IRS must decide whether to continue with formal rulemaking or to shift towards more informal guidance that can be issued quickly without notice and comment. While it is possible that the IRS may shift towards more informal guidance, the IRS has also seen the benefit in receiving and considering taxpayers and tax practitioners’ comments and input through the formal guidance practice.

Similarly situated taxpayers in different jurisdictions may find themselves receiving different outcomes depending upon how each court decides to interpret Treasury and IRS guidance. Post Loper Bright, many judges may continue to find tax regulations persuasive and will adopt the government’s interpretation. For instance, one U.S. Tax Court Judge has already indicated that she believes that the “Tax Court will continue to lend considerable credence to agencies’ rules” due to Treasury and the IRS’s “special competence in drafting tax regulations.”

From an employee benefits perspective, in the short-term, Loper Bright will likely impact litigation surrounding recent Biden-era initiatives. For example, the DOL’s new “retirement security rule” (the updated “fiduciary rule”) can impose ERISA fiduciary status on a participant’s personal investment advisor or insurance sales representatives. The legitimacy of the retirement security rule is currently being challenged in the Fifth Circuit—the same circuit that struck down the fiduciary rule in 2018 on Chevron and other grounds. The district court has yet to decide this matter.

Another DOL rule being challenged concerns whether a fiduciary may consider environmental, social, and governance factors when deciding investments or whether ERISA’s exclusive benefit rule effectively prohibits such considerations. This case was also filed in the Fifth Circuit, but the district court (Northern District of Texas) held that the DOL’s rule was permissible under the Chevron analysis. However, a panel of the Fifth Circuit is considering remanding the case back to district court to review in light of the Loper Bright decision. As it concerns executive compensation, the Federal Trade Commission’s (“FTC”) recent rulemaking initiative regarding noncompetition agreements (described below) could impact the taxation of various compensation agreements. (A noncompete can be used to delay vesting of compensation.)  

Federal Trade Commission

Loper Bright may impose additional obstacles on the FTC’s efforts to pursue a more aggressive rulemaking and enforcement agenda, particularly in the competition arena. Section 5 of the FTC Act gives the agency authority to bring enforcement actions against parties for engaging in “unfair methods of competition” or “unfair or deceptive acts or practices,” broad and flexible terms that the agency has attempted to define through litigation and policy statements.^[48] The FTC also promulgates and enforces rules that define “unfair or deceptive acts or practices” under a modified version of APA formal rulemaking.^[49] The FTC’s authority to issue competition rules, however, is an open question that is currently being litigated. The FTC controversially issued its first competition rule in decades just recently, banning most noncompete agreements as an unfair method of competition, claiming it has APA notice and comment competition rulemaking authority under Section 6(g) of the FTC Act.^[50] The FTC is also charged with implementing and enforcing a number of other statutes, such as the Hart-Scott-Rodino Act (“HSR”),^[51] the Children’s Online Privacy Protection Act,^[52] the Telemarketing and Consumer Fraud and Abuse Prevention Act,^[53] and many others, typically under APA notice and comment procedures.

In recent years the FTC and courts have relied on Chevron to support the agency’s statutory interpretation in a number of administrative actions, including amendments to the HSR Act^[54] and enforcement under the Fair and Accurate Credit Transactions Act.^[55] While Loper Bright may have little effect on modest amendments to rules that fit neatly within a statutory framework, it could signal trouble for aggressive efforts, including recent proposals for broad amendments to HSR rules, when the agency’ statutory charge is less clear. As explained earlier, Loper Bright directs courts to evaluate for themselves whether the FTC has chosen the “best interpretation.”

Loper Bright may also present new obstacles to the FTC’s already complicated path to expand its “stand-alone” competition authority by suggesting, if not directly holding, that courts will not afford any deference to the FTC’s substantive interpretation of “unfair methods of competition.” Its recently issued and yet-to-be-tested Section 5 policy statement could well face increased scrutiny, if not skepticism. Loper Bright is also likely to bolster challenges to the agency’s effort to reassert its authority to engage in competition rulemaking. One district court has already relied in part on Loper Bright to grant a preliminary injunction against enforcement of its noncompete rule.

Transportation

As with the FTC, the Department of Transportation’s (“DOT”) current regulatory agenda is relatively aggressive. Loper Bright, therefore, stands to hamper that agenda by directing the courts to determine for themselves the “best interpretation” of statutes, which inherently gives them more latitude to overturn agency interpretations. This may present roadblocks for DOT’s recent aggressive enforcement and rulemaking agenda, which includes in 2023 the “highest amount of fines for consumer protection in department history.”^[56] This shift could particularly affect DOT rules in the consumer protection space, such as the controversial “fare transparency rule,”^[57] which recently has faced legal challenges, and the  parameters of DOT’s authority to define “unfair and deceptive practices”^[58] and “unfair methods of competition.”^[59] Consequently, the DOT may focus on promulgating narrower, more technical rules directly tied to its current statutory authority to mitigate the risk of broader rules being challenged and potentially overturned. DOT may also face greater challenges to its enforcement actions where there is room for interpretation in the boundaries of its statutory mandate and may need to more thoroughly justify their enforcement actions and rulemakings.

In areas where industry may want greater–and quicker–regulation, such as in emerging technology, DOT and the Federal Aviation Administration (“FAA”) may be more restrained in their authority to act without specific statutory mandates and particularly for informal guidance or policy documents. We may also see impacts of this decision in emerging fields like commercial space, where the FAA’s oversight of commercial human spaceflight will now face heightened judicial scrutiny, potentially causing delays and inconsistencies in safety standards. Historically, rulemaking in emerging fields evolved in tandem with industry advancements, but this is unlikely to continue.

The ruling may also present greater challenges for other transportation sectors as well such as maritime and transportation safety, where there are open questions related to the breadth and scope of agencies’ role. For example, the US Coast Guard’s role under the Jones Act, the National Highway Safety Administration’s role in administering the National Traffic and Motor Vehicle Safety Act, interpretations of navigational decisions, and the role of the FAA and the National Transportation Safety Board's (NTSB) in accident investigations.

For its part, Corner Post, which as discussed above altered the limitations periods for certain cases under the APA, is unlikely to impact the timeframe for challenging DOT rules. The Hobbs Act still mandates that plaintiffs file suit within 60 days after a DOT regulation is issued, seemingly ensuring a specific and limited period for legal challenges despite the broader effects of the Loper Bright ruling. The majority opinion makes this point in Corner Post.^[60]

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This being a Presidential election year, we would be remiss if we did not acknowledge the obvious: that political forces independent of the courts can alter regulatory agendas as much as, and sometimes more quickly than, court decisions. But Loper Bright, as was true of Chevron, is (at least in theory) nonpartisan. While a different administration with different regulatory priorities may pull back in some areas, thus negating the need for judicial review of current regulations and thereby muting the impact of Loper Bright on the current regulatory agenda, that new administration may well push out more aggressively in other areas. If it does so, the same standard of judicial review will apply. And if those future regulatory actions are based on statutory interpretations that are not the “best” interpretations, Loper Bright will require that they be set aside.