Chevron Deference The doctrine known as “Chevron deference” was established in 1984 in Chevron U.S.A. Inc. v. Natural Resources Defense Council Inc.1 Chevron deference required courts to defer to an agency’s reasonable interpretation of an ambiguous law that the agency administers.2 Chevron deference has shaped the courts’ review of agency decisions and regulations for the last 40 years and has led lower federal courts to rule in favor of regulatory agencies in the majority of challenges to their rules and regulations.3 Since Chevron, the role that regulatory agencies have played in interpreting their rules and regulations has greatly expanded. Loper Bright Decision Overruling Chevron Deference The Supreme Court’s 6-3 decision on June 28, 2024, in the Loper Bright Enterprises v. Raimondo case, formally overruled Chevron deference.4 The Court held that the Administrative Procedure Act required courts to “exercise their independent judgment in deciding whether any agency has acted within its statutory authority.”5 The Court quoted Justice Marshall in Marbury v. Madison that “[i]t is emphatically the province and duty of the judicial department to say what the law is.”6 The Court noted that even when “an ambiguity … implicate[s] a technical matter,” the judges, who are informed and educated by the parties, are expected to do and “handle technical statutory questions.”7 The one exception is when “a particular statute delegates authority to an agency consistent with constitutional limits.”8 In this instance, the Supreme Court directed courts to “respect the delegation, while ensuring that the agency acts within it.”9 Congress retains the ability to expressly delegate authority to federal agencies. Following the Loper Bright decision, Congress will be required to be more precise in granting authority to federal agencies to avoid the heightened scrutiny by the court system. The Court also made clear that its overruling of Chevron deference does not apply retrospectively.10 Cases that were decided on Chevron deference remain valid under the principle of “stare decisis,” which is a legal doctrine that requires courts to follow the decisions of previous cases. This will make it more difficult to challenge existing regulatory interpretations based solely on the Court’s change in interpretative methodology. Impact on the Banking Industry Opportunities to Challenge Existing Regulations and Increase in Litigation The dramatic end of Chevron deference will likely increase the number of cases filed challenging agency regulations and decisions and increase the banking industry’s likelihood of success when challenging federal agency regulations and the interpretation of those regulations. In situations where regulators have not been delegated clear and lawful authority by statute, challengers will no longer have to overcome an automatic deference to the regulatory agency’s interpretation. In situations involving statutory ambiguities, the banking industry is now on a more level playing field to challenge agency decisions. To be successful, opponents must only show that the regulatory agency’s interpretation of its statute is not the “best” one. It does not have to prove that the regulatory agency’s interpretation is 19 West Virginia Banker
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