At the end of the Supreme Court’s 2023-24 term, the Court’s conservative majority effected a sea-change in federal administrative law, asserting a stronger role for the courts in the regulatory state and bringing into question the legality and viability of many regulatory programs. Briefly:

• In Loper, the Court abandoned the Chevron doctrine, overruling a 40-year-old precedent that was central to thousands of administrative law cases. Courts must now decide questions of interpretation under regulatory statutes for themselves, not by deferring to reasonable agency interpretations where the statute is ambiguous. Loper will have profound effects, particularly on economic and environmental regulation and Government efforts to tackle developing issues like climate change, energy transition, and AI regulation; the cases immediately before the Court (it decided one case in favor of Atlantic herring fishermen challenging an agency inspection fee, and sent back to the D.C. Circuit another case involving the qualification of a solar facility for favorable treatment under federal energy law) are just the tip of the iceberg. That said, agency interpretations will still command “respect” where the court decides they have the “power to persuade,” courts will generally still defer to reasonable exercises of agency discretion on matters of policy under the “arbitrary and capricious” standard where a statute clearly provides an agency discretion to choose among a range of results, judicial review of exercises of agency discretion (where that remains) and agency fact-finding is unaffected, and specific judicial precedents reached under Chevron remain, for the most part, good law.

• In Jarkesy, the Court invoked the Seventh Amendment right to jury trial in suits at common law to invalidate a statute authorizing the SEC to proceed by administrative litigation (subject to judicial review) to assess civil penalties for violations of fraud-related statutory provisions. The SEC can still seek civil penalties in court before a jury, since its governing statute provides for that alternative. But the Court’s decision appears to suggest that it is ready to abandon or at least dramatically limit a 1977 precedent, Atlas Roofing, that upheld administrative adjudication of civil penalties in OSHA workplace safety cases. If that happens, statutes authorizing scores of federal agencies to use administrative litigation to assess civil penalties for statutory and regulatory violations will be invalidated, and many of those agencies, in contrast to the SEC, are not authorized to seek civil penalties directly in court, so they would be left with no civil penalty remedy unless and until Congress amends their governing statutes. In the same case, the Court left for another day sweeping constitutional questions that it will surely address in the next few years regarding agency use of Administrative Law Judges and the “non-delegation” doctrine’s limits on standardless delegations of power from Congress to agencies.

• In Corner Post, the Court enlarged the opportunity for opponents of agency action to seek judicial review under Loper and other applicable standards by holding that the default 6-year time limit in which review must be sought runs from when the applicant was injured by the agency action, not the agency action itself. For some agencies, that means that their regulations could be challenged decades after they were promulgated, by parties whose injury was more recent, including some who (like the challenger in Corner Post) may not even have existed when the regulations were issued. Other agencies subject to their own specific statutory time limits on judicial review will be unaffected by Corner Post itself, although it may reflect a broader willingness on the part of the Court to ensure that every challenger has their “day in court” even if that means that the fate of regulations will be uncertain for a long time.

• Ohio v. EPA, staying the EPA’s “Good Neighbor Rule” on the basis that it is probably arbitrary and capricious, is the latest in a series of cases in which the Court has rejected broad regulatory initiatives by Democratic Administrations to address climate change and other large-scale environmental concerns. The decision does not break new ground in terms of fundamental principles of environmental law, but it is indicative of the Court’s robust approach to judicial review of ambitious environmental regulation.

The Court’s decisions leave many questions unresolved. In its next term, the Court will address several more administrative law cases and a major environmental case, Seven County, concerning the scope of environmental review required before agency action (including approval of transport and other infrastructure projects) under the National Environmental Policy Act (NEPA). Meanwhile, a long list of issues arising from or left unresolved by the Court’s recent cases will be litigated in various statutory and agency contexts in the federal courts of appeals, with potential Supreme Court decisions to follow. 

There is now a lot of uncertainty in the field of administrative law. But what is certain is that there will be a significant increase in judicial review litigation. And at the same time, there will be efforts in various federal agencies and in Congress to wrestle with and adapt to the new and evolving judicial precedent. Regulators, policymakers and anyone regulated by or otherwise interested in the regulatory actions of a federal agency needs to follow these developments and understand the particular risks and opportunities they represent in each regulatory context.

Dentons has assembled a multi-disciplinary team of appellate, regulatory, public policy and subject-matter experts, including former Supreme Court clerks and senior agency officials and legislative staff, to assess and advise clients not merely on what the new and developing cases say, but on ongoing and likely future developments and their strategic implications for particular industries and regulatory contexts. The attached materials provide initial general guidance on various aspects and applications of the evolving administrative law landscape and will be updated on an ongoing basis. Clients seeking more in-depth and customized analysis, or with particular issues in mind, are invited to contact any member of our team.

Employment and Labor

U.S. Supreme Court Overrules Chevron Doctrine – Implications for Employers

Partner Kate Erdel and Senior Managing Associate Shaina Bloom discuss how the recent Supreme Court’s decision to overturn the Chevron Doctrine curtails the long-standing judicial deference to administrative agencies, compelling courts to interpret ambiguous statutes independently. This seismic shift affects labor and employment regulations, as agencies like the Department of Labor and the Occupational Safety and Health Administration can no longer rely on Chevron’s authority, leading to a more scrutinized and potentially litigious regulatory environment. Employers can expect a wide range of decisions over the next year as this landmark Supreme Court ruling emphasizes the judiciary’s role in statutory interpretation and alters the balance of power between the courts and federal agencies.

Energy

The Supreme Court Has Just Dismantled Traditional Energy Regulation and Created a Whole New Paradigm Dominated By The Judiciary Rather Than Administrative Agencies

Partners Clint Vince, Emma Hand and Simon Steel discuss the impact of the recent Supreme Court rulings that have signaled the Court’s intention to crack down on the amount of authority and discretion that federal agencies have enjoyed over the last several decades, and to assert the power of the federal judiciary in a manner that will have significant ramifications for the regulation of energy by the Federal Energy Regulatory Commission (“FERC”).

Recorded Event: Smart Cities & Connected Communities Think Tank roundtable entitled, “Supreme Court Overturns Chevron Doctrine: Implications for Energy and Climate Policy and Beyond”

 Our distinguished panelists discussed the recent Supreme Court decision in Relentless v. Department of Commerce and Loper Bright Enterprises v. Raimondo. In perhaps the most consequential legal decision affecting federal regulatory law in some time, the Supreme Court, in a 6-3 decision, has overruled Chevron, giving federal agencies less discretion under the Administration Procedure Act (APA) to interpret statutory law. Our panelists discussed how this decision reshapes energy and climate policy and beyond.

Environment and Natural Resources

A Sea Change in Environmental Law: The Supreme Court Just Up-Ended Administrative Review and Enforcement As We Knew It

As discussed by our Environment and Natural Resources team, the Supreme Court handed down three blockbuster rulings that will likely unwind fifty years of federal administrative/environmental law.  Although lawyers sometimes overstate the significance of any one opinion, when combined, the cases of SEC v. Jarkesy, Loper Bright Enterprises v. Raimondo, and Corner Post v. Federal Reserve will radically alter administrative environmental reviews and enforcement, and greatly impact the issuance of civil penalties by all federal agencies. Any client with pending administrative enforcement actions should review these cases and consult with counsel immediately.

Federal Regulatory and Compliance

Kalshi v. CFTC: Effect on the CFTC’s Rulemaking and a New Era for Event Contracts

Partner Mark Wetjen and associate Nicole Thrun discuss litigation related to political-event contracts regulated by the US Commodity Futures Trading Commission (CFTC) (Kalshi v. CFTC), and a CFTC rulemaking on the same subject. Notably, this is the first federal court decision that cited the Loper Bright Enterprises v. Raimondo decision in reviewing the actions of the CFTC regarding how the agency interpreted the CEA.

Government Contracts

A Farewell to Chevron: SCOTUS Overturns the 40-Year-Old Precedent, Deeply Widening the Path for Government Contractors and Other Private Parties to Challenge Agency Interpretations of Statutes

Almost exactly 40 years ago, the United States Supreme Court established the Chevron doctrine, which required that federal courts defer to federal agencies in their interpretation of statutes that are silent or ambiguous on a specific issue, even if the court disagreed with the agency’s interpretation, provided the agency’s interpretation was a “permissible construction” of the law. On June 28, 2024, the Supreme Court reversed course and overruled Chevron in a 6-3 decision. Our Government Contracts lawyers focus here on the key takeaways for government contractors.

Intellectual Property & Technology

How Will the Supreme Court’s Post-Loper Stance Affect Judicial Review of Patent-Related Agency Actions?

Although the case did not involve any patent issues, the Supreme Court’s Loper ruling at the end of its 2023-24 term expanding the judicial role in federal regulation has implications for patent law. The client alert recaps the ruling and addresses the impact it will have on patent law through judicial review of actions of the Patent and Trademark Office (“PTO”) and the International Trade Commission (“ITC”).

International Trade

Sanctions+ Podcast: A Conversation on the fall of the Chevron Doctrine with Duke University School of Law Professor Tim Meyer

In an episode of Sanctions+, the podcast of Dentons’ International Trade team, managing associate Milana Karayanidi and law clerk Leah Kehoe interview Tim Meyer, a constitutional law professor at Duke University School of Law. They discuss the effects of the US Supreme Court recently overturning the landmark Chevron decision, and Professor Meyer explains the concepts of foreign affairs exceptionalism, the Major Questions Doctrine, IEEPA emergency powers, and the expected uncertainties and certainties in the sanctions space that will follow.

Public Policy and Regulation

Firms Must Offer A Trifecta Of Services In Post-Chevron World

The Supreme Court's June decision overturning the Chevron doctrine underscores the need for law firms to integrate litigation, lobbying, and communications. Dentons Partner Neil Hare explains why.

Tax

After Chevron: Uniform Tax Law Interpretation Not Guaranteed

Tax Controversy attorneys Michelle A. Levin and Carneil D. Wilson discuss the U.S. Supreme Court’s decision to overturn the Chevron deference and its impact on tax law in the Law360 Expert Analysis series published on July 9, 2024. The article explores the decision's likely influence on agency rulemaking and what guidance the IRS may or may not issue to taxpayers.