For over 40 years, the “Chevron Doctrine” governed the interpretation of ambiguous statutes or regulations in areas of the law where Congress had empowered federal agencies to undertake rulemaking. (Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. (1984) 468 U.S. 837 (“Chevron”).) Under this long-standing framework, courts were required to defer to federal agencies’ “reasonable” interpretations of ambiguous statues and regulations, thereby precluding judges from substituting their own interpretation of a regulation or statute, even when the court’s interpretation differed from that of the federal agency.
However, in June 2024, the United States Supreme Court overturned Chevron, instead holding that courts must exercise independent judgment in deciding whether an agency has acted within its statutory authority, and that courts cannot defer to an agency’s interpretation of the law merely because a statute is ambiguous. (Loper-Bright Enterprises v. Raimondo (2024) 603 U.S. ____, 35 (“Loper-Bright”).)
For clients dealing with federal agencies, Loper-Bright will likely change the legal landscape, as the Supreme Court’s decision may increase the likelihood of success of challenges to agencies’ interpretations of certain statutes and regulations. However, agency deference is unlikely to disappear entirely because the Supreme Court left intact other relevant case law. As a result, many courts are likely to fall back on the pre-Chevron “Skidmore deference,” which establishes that agency interpretations may be “entitled to respect” to the extent the agency has the “power to persuade” by virtue of its body of expertise, consistency, and thoroughness of judgment, or by virtue of other compelling case characteristics. (Skidmore v. Swift & Co. (1944) 323 U.S. 134, 323 (“Skidmore”).) This allows courts to apply agency deference on a case-by-case basis to the extent such deference may be appropriate based on the facts.
For clients dealing with California state agencies, Loper-Bright is unlikely to have any immediate, direct effect on the courts. California has its own body of case law governing agency deference that technically remains unaffected by the U.S. Supreme Court’s decision in Loper-Bright. California’s seminal agency deference case, Yamaha Corp. of America v. State Bd. of Equalization, established two broad categories of factors relevant to a court’s assessment of the weight to give an agency’s interpretation: those “indicating that the agency has a comparative interpretive advantage over the courts,” (i.e., whether an agency is specially situated to interpret the laws at issue, such as those involving highly technical or scientific regulations) and those “indicating that the interpretation in question is probably correct” (which considers factors such as how consistent and rigorously-considered the agency’s interpretation has been over time). In crafting this test, the Court relied on Skidmore, not Chevron, finding that agencies’ interpretations are entitled to “great weight and respect,” though the degree of deference afforded is “fundamentally situational.”
The reasoning of Loper-Bright could potentially trickle down to the state level, which may result in an increased number of challenges to California’s less-deferential approach to agency interpretation. If so, those challenges may ultimately change California law with respect to agency interpretation. Time will tell.