Doctrine Disrupted: Doing Business in a Post-Chevron World - McDermott Will & Emery

Key Takeaways | 2024 Enforcement Outlook | Doctrine Disrupted: Doing Business in a Post-Chevron World

Overview



On June 28, 2024, in Loper Bright Enterprises v. Raimondo, the US Supreme Court overruled the decades-old Chevron doctrine. That decision marks the end of judicial deference to agency interpretations of statutory ambiguities.

During this webinar in our Enforcement Outlook series, Paul Hughes and Sarah Hogarth broke down the decision and previewed what lies ahead for the business community.

Top takeaways included:

  1. Courts, not agencies, must now determine the meaning of federal statutes. Loper Bright overruled the 40-year-old Chevron doctrine. Under Chevron, where a statute had one unambiguous meaning, its language controlled. Where, however, a statute was silent or ambiguous on an issue, Chevron required courts to defer to an agency’s “permissible” reading of a statute.
    1. Chevron created a regime under which statutes could have multiple meanings, with agencies enabled to supply or even change a statute’s meaning.
    2. Loper Bright now fully eradicates deference to agencies in statutory construction. It requires courts to use all the ordinary tools of statutory construction to reach the “best reading” of a statute, including to resolve any ambiguities.
    3. Although courts will certainly consider agency positions on the meaning of a statute, those views will no longer carry controlling weight.
  2. The Court has set clear go-forward instructions even where a statute leaves an agency discretion. A statute might leave an agency discretion by:
    1. Express delegation, like directing an agency to define a particular statutory term;
    2. Express/implied directions to fill up the details of a statutory scheme through rulemaking, like when standing up a new federal program; or
    3. Implicit delegation through terms with “regulatory flexibility” like “appropriate” or “reasonable.”
  • Even where the statute has done so, courts must now assess:
    • Has the agency acted within congressionally set “boundaries”?
    • Has the agency engaged in “reasoned decisionmaking”?
  1. Loper Bright comes at a time when courts are very focused on agency action. Several major decisions in recent years limited agency authority.
    1. Retraction of deference: In 2019, in Kisor v. Wilkie, argued by McDermott’s Paul Hughes, the Court salvaged, but substantially pared back, Auer deference – a deference doctrine that obligated courts to defer to agency interpretations of ambiguous regulations. Through Loper Bright, binding deference on questions of statutory interpretation has been overruled.
    2. Major questions doctrine: In West Virginia v. Environmental Protection Agency (2022) and Biden v. Nebraska (2023), the Court held agency action invalid using the major questions doctrine.
    3. Statute of limitation: In Corner Post v. Board of Governors of the Federal Reserve System, the Court rejected a reading of the Administrative Procedure Act’s statute of limitations that would preclude facial challenges to regulations after six years, giving new market entrants an opportunity to challenge old regulations.
    4. Seventh Amendment: This term, in Securities and Exchange Commission v. Jarkesy, the Court held that the Seventh Amendment entitles a defendant to a jury trial, not trial by administrative tribunal, when the SEC seeks civil penalties for securities fraud.
  2. There is both risk and opportunity in a post-Loper Bright world. Businesses are likely to face some increased uncertainty in Loper Bright’s wake. Agency regulations or guidance will no longer have the same stabilizing effect, and reliance on them may need to be reexamined. Courts may also disagree over statutes’ best meaning.
  • Businesses have available several strategies to respond to this uncertainty:
    • Regulated entities should assess the statute, determine its “best” reading and ensure agency authority satisfies Loper Bright’s inquiry; agency regulations and guidance are no longer as reliable.
    • Regulated entities should assess how they interact with agencies. Agencies will need to do substantial homework to ensure any regulations or actions comport with the statute. This provides a huge opportunity for regulated entities to assist agencies by participating in agency processes.
    • Litigation will become yet more omnipresent for regulated entities.
    • Regulated entities may want to call on Congress to add more specificity in legislation.
  • Businesses also will have increased ability to use strategic litigation with agencies.
    • Any regulatory pain points should be evaluated to ensure the agency’s action comports with the statutory text, is authorized by the statute and is the product of reasoned decisionmaking.
    • Parties should emphasize building administrative records with their governing agencies. Regulated parties can now supply expert views to agencies on statutory meaning. These record materials may later assist courts in discerning the best reading of a statute. And a strong administrative record is essential to successfully challenging (or defending) agency action.

Check out past recordings and materials from our Enforcement Outlook webinar series.

Dig Deeper

New York, NY / McDermott Event / October 17, 2024

HPE NYC 2024

London, United Kingdom / McDermott Event / September 19, 2024

HPE Europe 2024

Chicago, IL / McDermott Event / September 12, 2024

Chicago Boot Camp for Private Equity Professionals 2024

Get In Touch