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The Supreme Court Significantly Alters the Landscape for Reviewing and Challenging Federal Agency Action

Within a three-day period at the tail end of its term, the Supreme Court issued two decisions that significantly affect the federal administrative law landscape, and will necessarily influence environmental regulations and enforcement in years to come.

Loper Bright Enterprises, et al. v. Raimondo, et al.

On June 28, 2024, in a decision authored by Chief Justice John Roberts, a 6-3 majority held in Loper Bright Enterprises, et al. v. Raimondo, et al. that courts may not, under the Federal Administrative Procedure Act (APA), defer to an agency’s interpretation of a law when faced with statutory ambiguity. Instead, the court held that the APA requires courts to exercise their independent judgment in deciding how an ambiguous law should be interpreted and discern for itself whether an agency has acted within its statutory authority.

This holding overrules the doctrine of deference articulated by the Supreme Court in Chevron, U.S.A. Inc. v. National Resources Defense Counsel, Inc.  forty years ago, which required courts to defer to an agency’s interpretation of a federal statute where Congress had not directly spoken to the precise language at issue in the statute and the agency provided “a permissible construction of the statute.” The Loper majority (composed of Justices Roberts, Thomas, Alito, Gorsuch, Kavanaugh and Coney Barrett) held that a court affording such deference to agencies violates the APA’s scope of judicial review, as outlined in 5 U.S.C. § 706, which, under the majority’s interpretation, requires a reviewing court—not the agency whose action it reviews—to decide all relevant questions of law and interpret statutory provisions.

Notably, when describing how courts should exercise their independent judgment, the majority stated that courts may still rely on agency expertise. The majority cited its prior decision in Skidmore v. Swift, remarking that “courts may—as they have from the start—seek aid from the interpretations of those responsible for implementing particular statutes.” The majority went on to recognize that agency interpretations “constitute a body of experience and informed judgment to which courts…may properly resort for guidance,” particularly where they “rest[] on factual premises within the agency’s expertise.” While leaving open the ability for courts to consider agency expertise when interpreting statutes may be beneficial to agencies who put forth persuasive arguments in support of their statutory interpretations, the amount of weight given to such considerations will vary among judges and may lead to inconsistent decisions across circuits where there are multiple challenges to a rulemaking. Justice Kagan argued in her dissent, “if consistency among judges is the majority’s lodestar, then the Court should not overrule Chevron, but return to using it.”

Although the Loper decision is a significant departure from past practice, the majority explicitly noted that it was not overturning the results of prior cases that relied on Chevron deference, including the Chevron decision itself, which upheld an Environmental Protection Agency’s regulation as consistent with the Clean Air Act. The majority also stated that its decision is not as impactful as some may think given that the Supreme Court has not deferred to an agency interpretation under Chevron since 2016 and before then “spent the better part of four decades imposing one limitation on Chevron after another.” For example, the Court previously held that Chevron deference only applies where an agency interprets a statute it administers and to agency actions carrying the force of law, such as those requiring notice-and-comment rulemaking or formal adjudication. The Court has also held that Chevron does not extend to cases where the question at issue is of “deep economic and political significance.”

Having finally overruled Chevron completely, the majority remanded the main issue in Loper—whether the Magnuson-Stevens Fishery Conservation and Management Act authorized the National Marine Fisheries Service to promulgate a rule requiring Atlantic herring fishery to fund costs for on-board observers—for further proceedings consistent with the majority opinion.

Corner Post Inc. v. Board of Governors of Federal Reserve System

On July 1, 2024, just three days after issuing its decision in Loper, the Supreme Court overruled a widely held interpretation of when the default statute of limitations under the APA begins to run to challenge a rulemaking or other agency decision. In Corner Post Inc. v. Board of Governors of Federal Reserve System, a 6-3 majority held that the 6-year default statute of limitations for suits against the United States does not begin to run in a suit brought under the APA until the plaintiff is injured by final agency action. Many prior cases had held that the limitations period commenced upon the action becoming final, which in the cases of a regulation could be long before it has any effect on a particular party.

The underlying issue in Corner Post was whether the merchant petitioner’s 2021 challenge to a 2011 Federal Reserve Board regulation setting a maximum interchange fee that applied to the petitioner was time-barred by the APA’s default six-year statute of limitations.

The government argued that the APA’s default statute of limitations should follow the “standard administrative-law practice of starting…when any proper plaintiff can challenge the final agency action.” The majority rejected this argument, drawing a distinction between the APA, which states the default statute of limitations begins to run when “right of action first accrues,” and other statutes that provide for the statute of limitations to begin to run on the date of the agency action’s “entry” or “promulgat[ion].” The majority ruled in favor of the petitioner, finding that its claims were not barred by the APA’s default statute of limitations because it had filed its suit within six years of its injury.

In her dissenting opinion, Justice Jackson observed that the new “plaintiff-specific” statute of limitations could lead to agencies facing never-ending lawsuits, stating that “[t]he Court has decided that the clock starts for limitation purposes whenever a new regulated entity is created. This means that, from this day forward, administrative agencies can be sued in perpetuity over every final decision they make. The majority’s ruling makes legal challenges to decades old agency decisions fair game.” Determining when a plaintiff is injured by final agency action will also undoubtedly become a focus in challenges to administrative actions for which the default statute of limitations or similarly worded statutes of limitations apply moving forward.

The full import of these decisions on federal regulations, including their impact on the environmental sector, likely will not be recognized until applied in subsequent litigations. The SPR Blog will continue to provide updates and analyses of significant developments in the implementation of these decisions.

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