The Post-Chevron Landscape: Implications for Our Clients


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United States United States United States Overview For 40 years, the Chevron deference doctrine, established in the landmark 1984 case Chevron USA, Inc. v. Natural Resources Defense Council, granted federal agencies significant interpretive power by requiring courts to uphold and defer to an agency’s reasonable interpretation of an ambiguous statute that it administers. However, on June 28, 2024, the US Supreme Court overruled Chevron in a historic 6-3 decision in Loper Bright Enterprises v. Raimondo. The court’s ruling in Loper Bright and its sister case, Relentless, Inc. v. Department of Commerce, dramatically shifted interpretive power from administrative agencies to the courts and to date have sparked over three dozen decisions and briefings challenging whether deference is due federal regulatory agencies’ interpretations. Instead of being required to defer to an agency’s interpretation of an ambiguous statute if reasonable, courts now must exercise their independent judgment. The Loper Bright decision potentially has far-reaching implications for each of our clients, impacting all sectors under any regulatory agency oversight, including environmental, energy, privacy and data security, health, education, labor and employment, financial services, consumer financial protection, and tax. Our clients must now navigate a more uncertain regulatory landscape. In addition to bolstering legal challenges to agency action by overruling Chevron, the US Supreme Court in a separate decision this term, Corner Post, Inc. v. Board of Governors of the Federal Reserve System, effectively extended the time available for claimants to challenge federal regulatory action under the Administrative Procedure Act (APA). By potentially strengthening challenges to agency interpretations that previously might have been entitled to Chevron deference, or allowing claims that would have been time-barred under the APA, these landmark decisions have opened the courthouse doors to a new wave of regulatory litigation. In addition, legislation is pending in Congress to amend the Administrative Procedure Act to require reviewing courts to apply Chevron deference, which, if enacted, could potentially overturn the result in Loper Bright. H.R. 1507, Stop Corporate Capture Act (introduced March 9, 2023); S. 4749, Stop Corporate Capture Act (introduced July 23, 2024). While it remains to be seen whether state courts that have followed Chevron’s deferential review of agency decisions will continue to do so, in-house legal teams and their counsel must vigilantly monitor court decisions and agency guidance to ensure compliance with evolving standards. As we track the progeny of the Loper Bright decision, we will provide insights on key developments here. Our attorneys are monitoring cases, outcomes, and their implications for our clients. U.S. Sugar Corporation v. EPA, a significant environmental case out of the D.C. Circuit on September 3, 2024, involved applicability of a revised emissions standard for hazardous air pollutants from industrial boilers pursuant to the Clean Air Act. The Clean Air Act directs the Environmental Protection Agency to establish emission standards for new and existing sources of hazardous air pollutants. A source is “new” if it is built after EPA proposes an emission standard for that source; a source is “existing” if it is built before then. Standards for new sources are stricter than those for existing sources. In a 2022 rule, EPA classified some industrial boilers as “new” sources even though they had been built before the revised emission standard was proposed in 2020. EPA contended that the relevant date for “new” versus “existing” was the date EPA proposed the original emission standard for boilers (in 2010), not when EPA proposed a sequential (later, revised) standard. The industry group contended that a source should be “new” only if built after the new standard was proposed. Citing Loper Bright, the D.C. Circuit reviewed the issue de novo and gave no deference to the agency’s interpretation of the Clean Air Act. The D.C. Circuit concluded: “The structure of the Clean Air Act makes clear that boilers constructed before each individual standard was first proposed are “existing,” and boilers constructed after each individual standard was first proposed are “new.” We therefore set aside EPA’s 2022 Rule to the extent that it defines sources constructed or reconstructed before August 24, 2020—that is, the date the 2022 Rule was proposed by EPA—as 'new source[s].'” It is uncertain whether the case would have come out the other way under the Chevron analysis. The opinion acknowledges that the relevant provision at issue (“after the Administrator first proposes … an emission standard”) “read in a vacuum, can be interpreted either way.” This suggests that under Chevron, the court might have noted an ambiguity and deferred to EPA so long as EPA’s reading was reasonable (Chevron step two). But, in ultimately concluding that the “structure of the Clean Air Act makes clear” that EPA’s reading was incorrect, it seems likely that the court would have ruled against EPA even under Chevron, at Chevron step two (if not step one). Utah v. Su. On July 18, 2024, the Fifth Circuit, citing Loper Bright, vacated and remanded a decision by the Northern District of Texas upholding the Department of Labor’s (DOL) regulation that permits (but does not require) ERISA fiduciaries to consider ESG factors in certain circumstances when making investment decisions. Also pending is a preliminary injunction motion before the Eastern District of Texas in Federation of Americans for Consumer Choice Inc. v. DOL, which is the first of several cases challenging the DOL’s latest iteration of the ERISA “fiduciary rule.” Again citing Loper Bright, on July 25 the Eastern District of Texas granted the plaintiffs’ motion for a preliminary injunction in Federation of Americans for Consumer Choice v. DOL and ordered a nationwide stay of the challenged portions of the “2024 Fiduciary Rule” including the controversial expanded definition of an ERISA investment advice fiduciary. CFPB v. Townstone Financial, pending in the Seventh Circuit, involves the Equal Credit Opportunity Act and the CFPB’s expansion of it to apply to an individual CEO’s conduct. Ryan LLC v. Federal Trade Commission, pending in the Northern District of Texas, and ATS Tree Services LLC v. Federal Trade Commission, pending in the Eastern District of Pennsylvania. Both matters involve the FTC’s rule banning noncompete agreements and suggest the potential for a circuit split on whether or not the FTC’s ban will take effect on September 4, 2024. Mayfield v. U.S. Dep’t of Labor, pending in the Fifth Circuit; State of Texas v. U.S. Dep’t of Labor, pending in the Eastern District of Texas; Plano Chamber of Commerce v. U.S. Dep’t of Labor, pending in the Eastern District of Texas; and Flint Avenue, LLC v. U.S. Dep’t of Labor, pending in the Northern District of Texas. These cases involve the DOL increasing the minimum salary threshold for white collar exemptions (executive, administrative, and professional) from minimum wage and overtime pay requirements under the Fair Labor Standards Act. Per the DOL’s rule, on July 1, 2024, the minimum salary threshold increased from $684 per week ($35,568 per year) to $844 per week ($43,888 per year). Then on January 1, 2025, the minimum salary will increase to $1,128 per week ($58,656 per year). YA Global Investments, LP, Dkt. 28751-15,pending in the US Tax Court (motion for leave to file motion requesting reconsideration considering Loper Bright of the court’s decision that a partnership’s liability for withholding tax can be reduced only to the extent allowed under the Treasury Regulations). 3M Company v. Commissioner, Dkt. 23-3772, pending in the Eighth Circuit (US government response: whether Treasury had to explain why its regulation did not conflict with a Supreme Court decision and respond to comments does not implicate Loper Bright). Services Antitrust and Competition Investigations Commercial Litigation Cybersecurity Employee Benefits and Executive Compensation Employment Litigation Energy Disputes Financial Services Disputes and Investigations Financial Services Regulation Litigation and Dispute Resolution Tax Industries Energy Financial Services Client Tools Key Contacts Leslie C. Bender Senior Counsel Washington, DC, United States John Coffron Associate Washington, DC, United States Jeffrey A. Friedman Partner Washington, DC, United States Clifford E. Kirsch Partner New York, United States Mary E. Monahan Partner Washington, DC, United States Raymond A. Ramirez Partner Washington, DC, United States Benjamin E. Reed Partner Atlanta, United States Joshua L. 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Overview

For 40 years, the Chevron deference doctrine, established in the landmark 1984 case Chevron USA, Inc. v. Natural Resources Defense Council, granted federal agencies significant interpretive power by requiring courts to uphold and defer to an agency’s reasonable interpretation of an ambiguous statute that it administers. However, on June 28, 2024, the US Supreme Court overruled Chevron in a historic 6-3 decision in Loper Bright Enterprises v. Raimondo. The court’s ruling in Loper Bright and its sister case, Relentless, Inc. v. Department of Commerce, dramatically shifted interpretive power from administrative agencies to the courts and to date have sparked over three dozen decisions and briefings challenging whether deference is due federal regulatory agencies’ interpretations. Instead of being required to defer to an agency’s interpretation of an ambiguous statute if reasonable, courts now must exercise their independent judgment. The Loper Bright decision potentially has far-reaching implications for each of our clients, impacting all sectors under any regulatory agency oversight, including environmental, energy, privacy and data security, health, education, labor and employment, financial services, consumer financial protection, and tax.

Our clients must now navigate a more uncertain regulatory landscape. In addition to bolstering legal challenges to agency action by overruling Chevron, the US Supreme Court in a separate decision this term, Corner Post, Inc. v. Board of Governors of the Federal Reserve System, effectively extended the time available for claimants to challenge federal regulatory action under the Administrative Procedure Act (APA). By potentially strengthening challenges to agency interpretations that previously might have been entitled to Chevron deference, or allowing claims that would have been time-barred under the APA, these landmark decisions have opened the courthouse doors to a new wave of regulatory litigation. In addition, legislation is pending in Congress to amend the Administrative Procedure Act to require reviewing courts to apply Chevron deference, which, if enacted, could potentially overturn the result in Loper Bright. H.R. 1507, Stop Corporate Capture Act (introduced March 9, 2023); S. 4749, Stop Corporate Capture Act (introduced July 23, 2024).

While it remains to be seen whether state courts that have followed Chevron’s deferential review of agency decisions will continue to do so, in-house legal teams and their counsel must vigilantly monitor court decisions and agency guidance to ensure compliance with evolving standards. As we track the progeny of the Loper Bright decision, we will provide insights on key developments here. Our attorneys are monitoring cases, outcomes, and their implications for our clients.

Insight on Key Cases

U.S. Sugar Corporation v. EPA, a significant environmental case out of the D.C. Circuit on September 3, 2024, involved applicability of a revised emissions standard for hazardous air pollutants from industrial boilers pursuant to the Clean Air Act. The Clean Air Act directs the Environmental Protection Agency to establish emission standards for new and existing sources of hazardous air pollutants. A source is “new” if it is built after EPA proposes an emission standard for that source; a source is “existing” if it is built before then. Standards for new sources are stricter than those for existing sources. In a 2022 rule, EPA classified some industrial boilers as “new” sources even though they had been built before the revised emission standard was proposed in 2020. EPA contended that the relevant date for “new” versus “existing” was the date EPA proposed the original emission standard for boilers (in 2010), not when EPA proposed a sequential (later, revised) standard. The industry group contended that a source should be “new” only if built after the new standard was proposed. Citing Loper Bright, the D.C. Circuit reviewed the issue de novo and gave no deference to the agency’s interpretation of the Clean Air Act. The D.C. Circuit concluded: “The structure of the Clean Air Act makes clear that boilers constructed before each individual standard was first proposed are “existing,” and boilers constructed after each individual standard was first proposed are “new.” We therefore set aside EPA’s 2022 Rule to the extent that it defines sources constructed or reconstructed before August 24, 2020—that is, the date the 2022 Rule was proposed by EPA—as 'new source[s].'” It is uncertain whether the case would have come out the other way under the Chevron analysis. The opinion acknowledges that the relevant provision at issue (“after the Administrator first proposes … an emission standard”) “read in a vacuum, can be interpreted either way.” This suggests that under Chevron, the court might have noted an ambiguity and deferred to EPA so long as EPA’s reading was reasonable (Chevron step two). But, in ultimately concluding that the “structure of the Clean Air Act makes clear” that EPA’s reading was incorrect, it seems likely that the court would have ruled against EPA even under Chevron, at Chevron step two (if not step one).
Utah v. Su. On July 18, 2024, the Fifth Circuit, citing Loper Bright, vacated and remanded a decision by the Northern District of Texas upholding the Department of Labor’s (DOL) regulation that permits (but does not require) ERISA fiduciaries to consider ESG factors in certain circumstances when making investment decisions. Also pending is a preliminary injunction motion before the Eastern District of Texas in Federation of Americans for Consumer Choice Inc. v. DOL, which is the first of several cases challenging the DOL’s latest iteration of the ERISA “fiduciary rule.” Again citing Loper Bright, on July 25 the Eastern District of Texas granted the plaintiffs’ motion for a preliminary injunction in Federation of Americans for Consumer Choice v. DOL and ordered a nationwide stay of the challenged portions of the “2024 Fiduciary Rule” including the controversial expanded definition of an ERISA investment advice fiduciary.
CFPB v. Townstone Financial, pending in the Seventh Circuit, involves the Equal Credit Opportunity Act and the CFPB’s expansion of it to apply to an individual CEO’s conduct.
Ryan LLC v. Federal Trade Commission, pending in the Northern District of Texas, and ATS Tree Services LLC v. Federal Trade Commission, pending in the Eastern District of Pennsylvania. Both matters involve the FTC’s rule banning noncompete agreements and suggest the potential for a circuit split on whether or not the FTC’s ban will take effect on September 4, 2024.
Mayfield v. U.S. Dep’t of Labor, pending in the Fifth Circuit; State of Texas v. U.S. Dep’t of Labor, pending in the Eastern District of Texas; Plano Chamber of Commerce v. U.S. Dep’t of Labor, pending in the Eastern District of Texas; and Flint Avenue, LLC v. U.S. Dep’t of Labor, pending in the Northern District of Texas. These cases involve the DOL increasing the minimum salary threshold for white collar exemptions (executive, administrative, and professional) from minimum wage and overtime pay requirements under the Fair Labor Standards Act. Per the DOL’s rule, on July 1, 2024, the minimum salary threshold increased from $684 per week ($35,568 per year) to $844 per week ($43,888 per year). Then on January 1, 2025, the minimum salary will increase to $1,128 per week ($58,656 per year).
YA Global Investments, LP, Dkt. 28751-15,pending in the US Tax Court (motion for leave to file motion requesting reconsideration considering Loper Bright of the court’s decision that a partnership’s liability for withholding tax can be reduced only to the extent allowed under the Treasury Regulations). 3M Company v. Commissioner, Dkt. 23-3772, pending in the Eighth Circuit (US government response: whether Treasury had to explain why its regulation did not conflict with a Supreme Court decision and respond to comments does not implicate Loper Bright).