At the end of an already impactful term, the United States Supreme Court issued a pair of decisions that overturned 40 years of precedent concerning the authority delegated to federal agencies and created new opportunities to challenge even long-established agency interpretations of statutes. The full import of these decisions will play out in the federal courts in the coming months and years, but it is already apparent that individuals and businesses impacted by federal agency action have new opportunities to challenge those actions, and the significant deference that the federal courts previously paid to agency interpretations of governing statutes is now largely a thing of the past.
The 1960s and 1970s saw a marked increase in the exercise of regulatory power by federal agencies, as well as the creation of entirely new agencies to tackle emerging challenges (such as the Environmental Protection Agency (EPA)). Federal agencies now exercise extensive authority, including in the areas of food and drug safety, consumer protection, health care, the environment, energy, transportation, labor and employment, immigration and telecommunications, to name only a few.
In 1984, the Supreme Court took up the case of Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.,1 a dispute that turned on the appropriate interpretation of an EPA regulation, promulgated under the Clean Air Act, that allowed states to adopt a plant-wide definition of a “stationary source” of pollution. That, in turn, allowed states to treat multiple pollution-emitting devices within the same industrial grouping as being within a single “bubble” for regulatory purposes.
In response to Chevron’s challenge to the EPA’s interpretation, the Supreme Court first recognized that the Clean Air Act was ambiguous because Congress had not expressly defined the term “stationary source.” In the absence of express guidance from Congress, the Supreme Court ultimately concluded that it would defer to the EPA’s interpretation of that statutory term – because the EPA’s interpretation was within the scope of its expertise and was reasonable.
Following the Chevron decision, federal courts began applying a two-step test for whether an agency’s interpretation of a statute should be upheld or rejected. First, the federal courts would examine the statute to determine if it was ambiguous. If not, there was no need to defer to the agency’s interpretation – the statute could simply be enforced as written. If the statute was ambiguous, however, the federal courts would proceed to a second step. If the agency interpretation was within the broad scope of its expertise or authority, and was reasonable, the Court would defer to the agency’s interpretation (even if the Court itself might have reached a different result had it independently interpreted the statute).
On June 28, 2024, the Supreme Court decided the consolidated cases of Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce (collectively, Loper Bright)2. In an opinion written by Chief Justice Roberts, a 6-3 majority overruled Chevron and the 40 years of precedent that followed it.
The Loper Bright case involved a challenge brought by commercial fishing businesses to a regulation adopted by the National Marine Fisheries Service (NMFS), a federal agency charged with administering fisheries in the territorial waters of the United States. The NMFS regulation at issue, based upon a provision in the Magnuson-Stevens Fishery Conservation and Management Act (MSA), imposed at-sea monitoring costs on fishing vessels catching Atlantic herring in the event that a federally funded observer was not available when that vessel declared into that fishery. The plaintiff’s fishing businesses in Loper Bright challenged that regulation, arguing that it was not authorized under the language of the MSA.
The Supreme Court held that, in the absence of an express delegation of authority by Congress to an agency, the federal courts must apply their own independent judgment to decide whether the agency is acting within the authority given to it by Congress. The Court further held that, in doing so, the federal courts may no longer rely on Chevron deference as the controlling factor. Instead, a federal court may take into account the agency’s interpretation, but must still exercise its own independent judgment, and apply common-law principles of statutory construction, to reach its own conclusion as to whether the agency is acting within its delegated authority.
In the wake of Loper Bright, we can expect federal courts to be more heavily involved in the interpretation of statutes governing the actions of federal agencies, and can also expect that individuals and business who believe that a federal agency has overstepped its bounds will find the courts more receptive to their arguments than perhaps they would have been in the past.
Although the decision in Loper Bright was a sea-change to the law governing federal agencies, it is another decision, rendered on the last day of the Supreme Court’s term, that may throw open the floodgates to judicial challenges to agency interpretations that were previously considered long-settled. That decision, in Corner Post Inc. v. Board of Governors of the Federal Reserve System,3 creates the potential for challenges to decades-old agency interpretations of federal statutes.
Corner Post opened for business in 2018, operating as a truck stop and convenience store. As a retail business, Corner Post was effectively required to pay fees to the banks processing its debit card transactions. Pursuant to a federal law passed in 2010, Congress tasked the Federal Reserve Board with regulating those fees and ensuring that they were “reasonable and proportional” to the costs incurred by the banks processing the transactions. The Federal Reserve Board ultimately published a regulation specifying a maximum fee of $.21 per transaction, plus .05% of the transaction amount.
Corner Post, believing that fee was too high, filed suit under the Federal Administrative Procedure Act (APA). However, the APA includes a six-year statute of limitation. The government argued the action was untimely because the regulation that Corner Post challenged was put in place in 2010.
The Supreme Court rejected this argument, concluding that Corner Post had six years from the time it was injured by the agency’s action (in this case, 2018, when Corner Post began doing business) to bring its APA claim.
The practical implication of the Corner Post decision is that plaintiffs who were injured within six years of the date they bring suit, even if those injuries were allegedly caused by agency interpretations that are far older, will no longer be barred from challenging an agency rule or regulation, regardless of how long that regulation has been on the books. In other words, even agency regulations that have gone unchallenged for decades, or which have been long considered valid based on deference to an agency’s interpretation of its own governing statute, are now potentially vulnerable to fresh challenges in the federal courts.
Whether or not the decision in Corner Post will, in the words of the dissenting Justices, result in a “tsunami of lawsuits” remains to be seen. However, the potential is certainly there, for better or worse.
The short-term consequences of Loper Bright include an expected increase in challenges to actions across a broad spectrum of federal agencies. Those challenges are also likely to result in more frequent decisions rejecting an agency’s statutory interpretation.
For instance, Loper Bright has already been cited as support by federal district courts in multiple jurisdictions, resulting in decisions enjoining enforcement of:
Other potential examples of agency interpretations or regulations that may be newly susceptible to challenge include:
Environment and Energy: EPA, the Department of Interior, Department of Energy, and Federal Energy Regulatory Commission (FERC) regulatory decisions based on highly technical and scientific research will now be subject to the independent judgment of the judiciary. For example, just three days after Loper Bright, the Supreme Court applied it to a pending case where the D.C. Circuit had relied on Chevron to uphold FERC’s interpretation of the Public Utility Regulatory Policies Act of 1978 with respect to a solar and battery facility. The Supreme Court granted the certiorari petition, vacated the judgment below, and remanded the case for further consideration in light of Loper Bright.
Immigration: Countless immigration administrative adjudications rely on Chevron, including decisions by the United States Citizenship and Immigration Services, the Department of State, the DOL and the Board of Immigration Appeals.
Health Care: Providers may challenge interpretations by the Department of Health and Human Services regarding Medicare and Medicaid as well as the Social Security Act and the Affordable Care Act. Additionally, the Food and Drug Administration’s authority to implement particular safety regulations under the federal Food, Drug, and Cosmetic Act may be ripe for challenge.8
Labor and Employment: DOL and the Equal Employment Opportunity Commission’s (EEOC) recent regulations could come under scrutiny. For example, the EEOC’s Pregnant Workers Fairness Act has included abortion as a covered medical condition eligible for reasonable accommodations.
Telecommunications: The Federal Communications Commission’s revival of Net Neutrality and categorization of broadband services as a communication service under Title II of the Communications Act appears vulnerable to challenge.9
Additional Assistance
For more information on how you might be impacted by Loper Bright or Corner Post, or how you business might avail yourself of these decisions, please contact a member of our Litigation Practice Team or the Phillips Lytle attorney with whom you have a relationship.
Significant research and editorial assistance provided by Amber G. Joyner, St. John’s University School of Law (J.D. expected May, 2025).
1 467 U.S. 837 (1984).
2 144 S. Ct. 2244 (2024).
3 144 S. Ct. 2440 (2024) (citing 76 Fed. Reg. 43394 (July 20, 2011)).
4 Ryan LLC v. Fed. Trade Comm’n, No. 24-CV-986, 2024 WL 3297524 (N.D. Texas July 3, 2024).
5 Texas v. U. S. Dep’t of Labor, No. 24-CV-211, 2024 WL 3240618 (E.D. Texas June 28, 2024).
6 Texas v. Becerra, No. 24-CV-211, 2024 WL 3297147 (E.D. Tex. July 3, 2024); Tennessee v. Becerra, No. 24-CV-161, 2024 WL 3283887 (S.D. Miss. July 3, 2024).
7 Kansas v. U.S. Dep’t of Educ., No. 24-4041, 2024 WL 3273285, at *3 (D. Kan. July 2, 2024) (quoting 89 Fed. Reg. 33474, 33476 (Apr. 29, 2024).
8 FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 165 (2000) (Breyer, J., dissenting).
9 N.Y. State Telecomm. Ass’n, Inc. v. James, 101 F.4th 135, 140 (2d Cir. 2024) (The Second Circuit held “[t]he FCC has the authority to determine the appropriate statutory category for a particular communications service, and its determinations are entitled to deference under Chevron[.]”).
