In brief

What happened?

The United States Supreme Court on June 28 released its opinion in Loper Bright Enterprises v. Raimondo, and Relentless, Inc. v. Department of Commerce, overturning the Chevron doctrine that compelled federal courts to defer to a federal agency's reasonable interpretation of an ambiguous statute. Six justices joined in the majority opinion of the court; two justices joined the majority opinion while also filing separate concurring opinions, and two justices dissented with another justice (Justice Jackson) joining the dissent as it applies to Relentless (Justice Jackson did not take part in considering or deciding the Loper Bright Enterprises case). 

Why is it relevant?

The court held the Administrative Procedure Act (APA) requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority, and courts may not defer to an agency interpretation of the law simply because a statute is ambiguous. 

The majority opinion emphasized that its holding does "not call into question prior cases that relied on the Chevron framework. The holdings of those cases that specific agency actions are lawful--including the Clean Air Act holding of Chevron itself--are still subject to statutory stare decisis despite our change in interpretive methodology.”  

The majority opinion notes that careful attention to the judgment of the Executive Branch may help inform whether an agency has acted within its statutory authority and when a particular statute delegates authority to an agency consistent with constitutional limits, courts must respect the delegation, while ensuring that the agency acts within it. 

The Chevron doctrine played a critical role in the relationship between administrative agencies and the courts. Virtually all federal agencies that engage in rulemaking may be impacted by the Supreme Court’s decision to overturn the Chevron doctrine. This is particularly relevant in tax, where taxpayers are challenging a number of recent regulations in the courts, including regulations under sections 78, 245A, 951A and 965. The Supreme Court’s opinion may impact the outcome of those controversies. 

What’s next?

PwC will provide a detailed insight into the court’s decision in the coming days.  

Court’s analysis

The majority opinion, written by Chief Justice Roberts and joined by Justices Thomas, Alito, Gorsuch, Kavanaugh and Barrett, overrules the Chevron doctrine, holding that the APA requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority. Justice Thomas and Justice Gorsuch each wrote separate concurring opinions (in addition to joining the majority opinion). Justice Kagan authored a dissenting opinion, which was joined by Justice Sotomayor and by Justice Jackson as it applies to Relentless (as noted above, Justice Jackson took no part in the consideration or decision of Loper Bright Enterprises).

In reaching its holding, the majority opined that “Chevron defies the command of the APA that the reviewing court—not the agency whose action it reviews—is to decide all relevant questions of law and interpret statutory provisions.” The majority also asserted that Chevron “requires a court to ignore, not follow, the reading the court would have reached had it exercised its independent judgment as required by the APA.” 

The majority opinion based its holding on the following assertions: 

• The Supreme Court has not deferred to an agency interpretation under the Chevron doctrine since 2016, but lower courts continued to apply it since it remained on the books. 
• Experience has shown that the Chevron doctrine is unworkable. “The defining feature of its framework is the identification of statutory ambiguity, but the concept of ambiguity has always evaded meaningful definition.” 
• “Chevron has been a distraction from the question that matters: Does the statute authorize the challenged agency action?” 
• "Chevron was a judicial invention that required judges to disregard their statutory duties.”