When the Clean Air Act refers to “major stationary sources” of air pollution, does that term mean each of the pollution-emitting units at a single plant, or does it mean the entire plant as a whole? Forty years ago, the U.S. Supreme Court held in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. that both of these interpretations were permissible and that the Environmental Protection Agency could therefore choose either of them. The ambiguity, it explained, constituted a “legislative delegation to an agency” that triggered “the principle of deference to administrative interpretations.” That is, the Court held that courts must defer to reasonable agency interpretations of ambiguous statutory provisions.

The Supreme Court has now overturned this deference rule in its opinion in Loper Bright Enterprises v. Raimondo issued on June 28. Chief Justice John Roberts’ opinion for the Court concludes that Chevron deference was ill-conceived from the start and makes two fundamental points. First, the Court’s decision emphasizes that the Administrative Procedure Act (APA), which is the authority for the vast majority of judicial review of federal agency actions, provides that “the reviewing court shall decide all relevant questions of law” and “interpret constitutional and statutory provisions” – and thereby codifies the longstanding proposition “that courts decide legal questions by applying their own judgment.”

Second, the Court’s decision repudiates Chevron’s presumption that “statutory ambiguities are implicit delegations to agencies,” explaining that “ambiguities may result from an inability on the part of Congress to squarely answer the question at hand, or from a failure to even ‘consider the question’ with the requisite precision” – and “[i]n neither case does an ambiguity necessarily reflect a congressional intent that an agency, as opposed to a court, resolve the resulting interpretive question.”

As the Court’s decision notes, the “Court did not at first treat [Chevron] as the watershed decision it was fated to become,” but “within a few years, both this Court and the courts of appeals were routinely invoking its two-step framework as the governing standard in such cases.” Indeed, Chevron has been applied in thousands of cases, big and small, across nearly every area of federal law – environmental regulation, drug regulation, education regulation, immigration law, grant and benefit programs, and more.

The abolition of Chevron deference is sure to have significant and wide-ranging consequences –including in pending cases, which is why many parties with ongoing challenges to agency regulations will be filing notices of supplemental authority about Loper Bright. On this score, it is worth noting that the Court’s decision specifically notes that its opinion does “not call into question” the holdings of prior “cases that specific agency actions are lawful—including the Clean Air Act holding of Chevron itself.”

One of the principal questions in future cases applying Loper Bright will concern the distinction the Court’s decision draws between 1) statutory provisions that are simply ambiguous and do not implicitly delegate authority (which courts will now interpret de novo) and 2) provisions that authorize the agency “to exercise a degree of discretion,” such as provisions giving the agency authority “to regulate subject to the limits imposed by a term or phrase that leaves agencies with flexibility, such as ‘appropriate’ or ‘reasonable.’” While some provisions clearly fall into the former category (e.g., the Clean Air Act provision in Chevron itself), categorizing other provisions will be more difficult.

Loper Bright is made even more significant by the Court’s opinion in Corner Post, Inc. v. Board of Governors, issued a few days later on July 1, the last day of the Court’s term. Authored by Justice Amy Coney Barrett, the Court’s decision in Corner Post holds that the APA’s default six-year statute of limitations starts running only when the plaintiff “suffers an injury from final agency action” – not when the agency first promulgated the challenged regulation. In Corner Post, a business that opened in 2018 sued in 2021 to challenge a regulation that was promulgated in 2011; the Court held the challenge was timely because the business filed suit within six years after it was injured by the regulation.

Corner Post thus means that businesses that have recently been injured by long-promulgated regulations will be able to challenge them – including on the ground that the regulation is contrary to a statutory provision on which the agency now receives no deference under Loper Bright. Importantly, however, Corner Post will not apply to agency regulations that are governed by more specific statutes of limitations – such as the Hobbs Act, which requires challenges to certain agencies’ regulations to be made within 60 days after the regulation is issued.

In short, the Court’s opinions in Loper Bright and Corner Post will be invoked in numerous challenges to agency rules across the federal regulatory landscape. Businesses in industries of all types should be prepared.