This summer in Loper Bright Enterprises v. Raimondo, 144 S.Ct. 2244 (2024), the U.S. Supreme Court jettisoned the Chevron doctrine, the landmark decision lasting for 40 years requiring courts to defer to reasonable interpretations of federal agencies responsible for implementing those statues and rules, even if the court might have interpreted them differently. The Loper decision reshapes the relationship between the judiciary and administrative agencies by emphasizing the courts as the primary interpreter of ambiguous statutes and agency rules.

The majority’s decision to overrule Chevron was primarily premised on their reading of the federal Administrative Procedure Act (APA). Particularly, Section 706 of the APA provides that courts must decide “all relevant questions of law” and “interpret constitutional and statutory provisions.” In their view, by mandating judicial deference to agency interpretations of statutes and rules, the Chevron court misconstrued the requirements of the APA, thus undercutting the independence of judicial review as intended by the APA. The majority opinion in Loper holds that “the Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the APA requires.”

In overruling Chevron, the Loper majority also stressed that the decision of the Court was consistent with Article III of the U.S. Constitution and subsequent interpretations of those Article III powers. Among the cases cited in Loper was Marbury v. Madison, where the Court held “it is emphatically the province and duty of the judicial department to say what the law is.” While the Loper majority viewed its holding as consistent with the power and role of Article III courts, it did not rule, as Justice Thomas argued in his concurrence, that Chevron violated Article III. The Loper Court thus left it for Congress to decide whether and, to what extent, it wants courts to defer to interpretations of federal agencies by amending the APA.

So, what next?

Post Chevron, one of the most immediate effects will likely be heightened judicial scrutiny of agency actions, especially where actions are premised on ambiguous language of environmental statutes, as found in the Clean Water Act, the Clean Air Act, etc., rather than specific grants of Congress’ authority. In construing the language of federal statutes and rules, courts will no longer be obliged to defer to the agency’s presumed expertise and thus rely on the agency’s interpretation in rendering its decision. Rather, courts will have to rely on the “traditional tools of statutory construction,” and independent judgment having weighed all the facts and arguments. And, while Loper acknowledges that part of the court’s “tool kit” includes an agency’s own interpretation, at least “to the extent it rests on factual premises within the agency’s expertise,” the ultimate decision rests now with the judiciary.

What does all this mean for practitioners? At the federal level, the Loper decision will likely result in more challenges to agency actions and rulemaking and less predictable outcomes. In fact, the environmental challenges have already started. The SEC’s recent push to promulgate a rule related to Environmental, Social and Governance (ESG) tracking for public companies may be doomed under Loper. The ESG disclosure rule was challenged by states and companies for exceeding its statutory mandate. The rule faces a real possibility of being vacated because, as argued, the language does not unambiguously give the SEC that authority. The SEC’s claim that this rule falls within its general duty to protect investors by addressing financial risks associated with climate change may no longer withstand scrutiny under Loper where agency expertise is not dispositive.

Similarly, the Bureau of Land Managements’ (BLM) recent rule interpreting the word “use” to include “conservation easements” under the Federal Land Policy and Management Act of 1976 is in jeopardy. BLM has interpreted “use” broadly before, but its prior interpretations had never encompassed easements. Citing to Loper, several lawsuits have challenged the BLM’s now broadened interpretation of “use.” The outcome of the current litigation will clarify whether BLM’s broader interpretation aligns with the statutory language while also revealing how courts may begin to navigate the implications of Loper.

Conclusion

The new Loper era represents an interesting and potentially significant paradigm shift for long time environmental practitioners. The central presumption that an agency’s own interpretation of the scope of statutory authority of its implementing rules represents the best reading of its delegated authority no longer prevails —at least for now. What follows the Loper decision is far from certain. Some anticipate litigation outcomes to become less definitive and expect more challenges to federal agency actions and rulemaking. Alternatively, some suggest, federal agencies may become more circumspect regarding the scope of their authority and Congress may become more precise with future statutory drafting. However, one thing is certain, environmental practitioners should take heed; a potentially significant change is afoot.

Lynn J. Preston is chair of Sheehan Phinney’s Environmental and Energy Practice Group, and Nick Harris is an associate at the firm.