The Chevron Doctrine Is Dead. What Are the Implications for Business?

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The Chevron Doctrine Is Dead. What Are the Implications for Business?

By David Zimmer | MIT Sloan Management Review | July 30, 2024

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The 1984 Supreme Court decision in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. established a crucial legal doctrine that required federal courts to defer to administrative agencies’ reasonable interpretations of ambiguous federal statutes. The doctrine gave agencies significant power to interpret laws.

In June 2024, the U.S. the Supreme Court overturned the Chevron doctrine in Loper Bright Enterprises v. Raimondo. This decision requires courts to use their “independent judgment” to identify the “single, best meaning” of an ambiguous statute rather than automatically deferring to any reasonable agency regulation.  The decision does not eliminate all agency influence on judicial decision-making. Loper Bright makes it clear that courts can still defer to agencies when a statute’s “best meaning” is that it gives the agency some discretion.  Statutes also confer upon agencies’ discretion to apply facts to the law. Loper Bright also makes clear that courts, in exercising their “independent judgment,” should still give weight to an agency’s interpretation of the statute, especially if the agency’s interpretation has been long-standing and consistent.

Nevertheless, Loper Bright marks a significant shift in how courts will evaluate agency regulations, giving them more flexibility in interpreting statutes and ending four decades of practice where agencies often had the final say in interpreting ambiguous laws.

The Supreme Court’s decision in Loper Bright alters the balance of power between regulatory agencies and the companies they regulate, creating opportunities and challenges. What follows are three important takeaways for business.

1. It should be easier to challenge agency regulations.  One clear implication of the Supreme Court’s decision is that businesses can be more aggressive in challenging unfavorable agency regulations (and other agency interpretations of federal statutes). Under Chevron, the party challenging the agency interpretation had to convince the court not just that the agency was wrong but that the agency was unambiguously wrong. Now, the party challenging an agency’s interpretation need only convince the court that the party’s reading of the statute is better than the agency’s.
2. Successful challenges will likely focus on statutory interpretations.  In considering a challenge, however, businesses should bear in mind that the benefits of the Supreme Court’s decision overturning Chevron are strongest in the case of a pure legal challenge to an agency regulation. The Supreme Court’s decision has far less impact on a challenge to the agency’s application of the statute to a specific set of facts.
3. Regulatory compliance no longer guarantees statutory compliance.  Businesses should recognize that the Loper Bright decision does not hand them an advantage in all circumstances. For example, businesses cannot assume that their compliance with agency regulations will shield them from a claim that they violated the underlying statute. Challenges to agency regulations may come not just from businesses but from other interest groups. Regulations can, of course, be pro-business (as in Chevron itself) or at least provide welcome clarity in the face of ambiguity about a statute’s requirements. By making it easier to challenge regulations, the Supreme Court has cast some uncertainty on the validity of regulations that businesses have long taken for granted.

2 key takeaways from the article

1. In June 2024, the U.S. Supreme Court overturned the long-standing Chevron doctrine ( that required federal courts to defer to administrative agencies’ reasonable interpretations of ambiguous federal statutes. The doctrine gave agencies significant power to interpret laws), fundamentally altering how businesses interact with federal regulations. The decision will almost certainly make it easier for companies to challenge agency regulations and other agency action interpreting federal statutes (that is, federal laws passed by Congress). However, it could also introduce new uncertainties in the regulatory landscape that will pose new challenges for business.
2. The Supreme Court’s decision in Loper Bright alters the balance of power between regulatory agencies and the companies they regulate, creating opportunities and challenges. What follows are three important takeaways for business.  One, it should be easier to challenge agency regulations.  Two, successful challenges will likely focus on statutory interpretations.  And three, regulatory compliance no longer guarantees statutory compliance.

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Topics:  Law, Chevron Doctrine, Loper Bright Enterprises v. Raimondo, Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. Regulations, Statutory compliance