Supreme Court Overrules Chevron: Three Takeaways from Loper Bright and Three Implications for Trade Law

On June 28, 2024, the U.S. Supreme Court overruled Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). Under the Chevron framework, federal agencies were entitled to a deferential level of judicial review (so-called ​“Chevron deference”) when an agency’s interpretation of ambiguous or silent text in a federal statute was challenged. In a 6-2 decision authored by Chief Justice Roberts, Loper Bright Enterprises, Inc. v. Raimondo, 603 U.S. __ (2024) (linked here), the Court ended the heavily-invoked doctrine of Chevron deference and held that, going forward, courts ​“must exercise their independent judgment in deciding whether an agency has acted within its statutory authority.”

The Chevron framework required a court to first ascertain, in reviewing agency action, ​“whether Congress has directly spoken to the precise question at issue.” If the answer was no—meaning the governing statute was ambiguous or silent—then the court would proceed to step two of the analysis: ​“whether the agency’s answer is based on a permissible construction of the statute,” later formulated as a ​“reasonableness” standard (even if the court would have reached a different conclusion). Both Skidmore deference (a pre-Chevron doctrine discussed further below) and this Chevron two-step test stemmed from a fundamental recognition of an agency’s technical and practical expertise regarding the statute it is authorized to administer.

The Court in Loper Bright eliminated the agency deference afforded by step two of Chevron. In particular, the Court held that courts ​“may not defer to an agency interpretation of law simply because a statute is ambiguous” because courts, rather than agencies, have sole competency to resolve statutory ambiguity. Because countless statutes task federal agencies with administering and enforcing laws, issuing rules and regulations, and deciding disputes—often requiring an agency to fill in a gap or construe statutory text—the end of Chevron deference is a significant change in administrative law. How agencies and lower courts interact with Loper Bright, and the issues raised in unique areas of regulatory law, will take time to play out, and will likely result in substantial variation and disagreement across administrative and judicial bodies.

Three Takeaways from Loper Bright

While Loper Bright marks a significant turning point by closing the door on Chevron deference, the Court’s decision does not entirely erase existing jurisprudence. Three takeaways from the decision stand out:

First, and perhaps most notably, the decision contemplates some continuity for prior holdings based on Chevron. The Court in Loper Bright emphasized that its overruling of Chevron did not ​“call into question prior cases that relied on the Chevron framework.” The Court stressed that “{m}ere reliance on Chevron cannot constitute a ​‘special justification’ for overruling” settled cases.

Second, the question of what deference, if any, should be afforded to agency action will likely become more context-dependent and nuanced. Loper Bright makes clear that agency interpretations of law are not entitled to any deference, but also recognizes that the interpretation of statutory meaning by a responsible agency may aid, but not control, the court’s analysis. To that end, certain pre-Chevron frameworks ostensibly remain intact. For example, Justice Kagan in her dissenting opinion to Loper Bright notes that the Court’s decision leaves in place so-called ​“Skidmore deference,” stemming from the Court’s decision in Skidmore v. Swift & Co., 323 U.S. 134 (1944). Under that framework, an agency interpretation (including of legal issues, as the Loper Bright majority notes), may warrant consideration depending on ​“the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.”

Third, and in the same vein, the Court noted that agencies are still entitled to a deferential level of judicial review for ​“agency policymaking and factfinding,” citing the Administrative Procedure Act (“APA”). Under section 706(2)(A) of the APA, a court will defer to agency actions unless they are ​“arbitrary, capricious, {or} an abuse of discretion.” Under section 706(2)(E) of the APA, a court will defer to agency factfinding in formal proceedings unless such factfinding is ​“unsupported by substantial evidence.”

Three Implications for Trade Law

Despite these three takeaways from the Court’s decision, as with countless other areas of law, Loper Bright may portend changes in trade law. The agencies heavily involved in administering trade laws include U.S. Customs and Border Protection, the Office of the U.S. Trade Representative, the U.S. Department of Commerce, and the U.S. International Trade Commission. These agencies and the federal courts that hear most of the challenges to their decisions, the U.S. Court of International Trade (“CIT”) and the U.S. Court of Appeals for the Federal Circuit (“CAFC”), have invoked Chevron on many occasions. Here are three initial implications for trade law:

First, relatively new applications and rulemakings involving interpretations of trade statutes may be attractive targets for litigation in this new post-Chevron landscape. Agencies have had less time to interpret these newer laws. Thus, these laws implicate few if any ​“prior cases that relied on the Chevron framework” that might otherwise shield them from Loper Bright-motivated challenges. At the same time, not all agency actions, recent or otherwise, involve interpretation of the governing law. Commerce and the International Trade Commission, for example, conduct factfinding proceedings. Factual determinations in these proceedings will continue to be afforded deference under the APA standard and statutory text that closely tracks the APA (see 19 U.S.C. § 1516a) setting forth the standard of review applied by the CIT and CAFC.

Second, existing agency rules may present risks and opportunities for fresh analysis of the underlying statutory authority in the context of challenges to agency actions. Whether and when the CIT and the CAFC will be inclined to flex their statutory interpretative power, however, is difficult to predict. For example, both of these courts have cited Chevron in numerous cases: 828 before the CIT and 543 before the CAFC, according to a July 1, 2024 case search. Of these 1,371 decisions, however, the vast majority have merely mentioned or cited Chevron—and, thus, may not be viewed as having relied on Chevron for their holdings—rather than including a full analysis or discussion. The Court’s discussion of the stare decisis principle in Loper Bright has the potential to raise a number of questions regarding, for example, what constitutes ​“mere reliance” on Chevron that might protect a prior holding from being overruled and what subsequent agency actions stemming from that prior holding might also enjoy such protection.

In addition, these courts of specialized jurisdiction that are national in scope have often expressed deference toward the fact-intensive and particularized nature of trade agency actions and interpretations of relevant statutes. For example, the CAFC has previously held that the Commerce Department ​“is the ​‘master of the antidumping law,’ and reviewing courts must accord deference to the agency in its selection and development of proper methodologies,” noting that “{a}ntidumping investigations are complex and complicated matters in which Commerce has particular expertise.” Thai Pineapple Pub. Co., Ltd. v. United States, 187 F.3d 1362, 1365-67 (Fed. Cir. 1999). Conceptually, that view suggests that actions by trade agencies may still warrant Skidmore deference.

Third, ongoing legislative reform attempts in Congress concerning trade matters might warrant greater attention. Affected industries should monitor proposed legislative bills for areas of potential ambiguity and an absence of clear delegation of discretionary authority to ​“give meaning to a specific statutory term.” The Loper Bright decision recognizes that even under the APA, the court’s role is to determine whether decision-making by an agency was ​“reasoned” within the bounds of its delegated statutory authority (itself a form of deference), thus bringing into stark relief the weight of such delegation, among other aspects of Congressional intent, when expressly stated by Congress. Stakeholder input at the congressional level will also take on added importance now that input through agency rulemaking and guidance may be less impactful in clarifying statutes.

In sum, in the short- and even medium-term, the likely scenario is substantial variation in application of Loper Bright in lower courts as litigation swells, which will almost certainly filter up to appellate circuit-specific disagreement. This expectation applies equally in the area of trade law, where decisions coming out of the CIT are unlikely to be uniform, as are decisions by different CAFC panels reviewing the CIT until the law resulting from Loper Bright settles.