The Demise of the Chevron Doctrine: Implications for State and Local Agencies

The U.S. Supreme Court's decision in Loper Bright Enterprises v. Raimondo marks a significant shift in administrative law by overturning four decades of Chevron deference. This landmark ruling redefines the relationship between administrative agencies and the judiciary, signaling a new era of scrutiny for federal, state, and local government entities. For state and local agencies, understanding the implications of this ruling is essential to mitigating risks and adapting to the new legal landscape.

The Loper Bright Decision and Its Impact

Loper Bright ends judicial deference to agency enforcement of rules, regulations, and policies based on agency interpretation of the underlying legislative authority. This ruling sets up the restoration of judicial oversight of agency interpretations. Federal agencies must now prepare for increased litigation as courts conduct reviews to assess the validity of new or previously unchallenged rules, regulations and policies. While Loper Bright directly impacts federal agencies, its ripple effects on state and local entities are yet to be fully understood and are likely to be substantial in the coming years.

State Variations in Deference to State Agency Interpretations

State courts have varying degrees of deference to state agency decisions. While Loper Bright does not explicitly apply to state courts' review of state agency decisions, it supports the trend toward independent judicial review.

• Substantial Deference: States like Alabama, California, and New York continue to employ robust deference to agency interpretations.
• Appreciable Deference: States like Alaska, Iowa, and North Carolina give agencies' interpretations "considerable weight" or "appreciable deference," particularly for technical or long-standing interpretations.
• Due Weight: States like Arkansas, Colorado, and Maryland acknowledge that agency interpretations may be helpful and give them "due weight."
• No Deference: States like Arizona, Florida, and Mississippi have abolished judicial deference to agency expertise.

Implications for State and Local Agencies

In jurisdictions where deference is not employed, state and local agencies must reassess their regulatory frameworks and risk management strategies. Key considerations include:

• Increased Litigation Risk: New rules, regulations, and policies may face heightened scrutiny.
• Evolving Standards of Review: Courts may assess agency decisions based on factors such as the thoroughness of the agency's consideration, the formality of its procedures, and the validity of its reasoning.
• Budgetary and Operational Impacts: Legal challenges can result in costly litigation and resource allocation issues.

Risk Assessment Strategies Post-Loper Bright

State and local agencies must adopt proactive measures and refine their risk assessment frameworks to mitigate litigation risk emanating from agency rules, regulations, and enforcement decisions. Key strategies include:

• Enhancing Rulemaking Processes: Clearly outline the rationale and statutory basis for new rules, engage stakeholders, and maintain thorough documentation.
• Strengthening Internal Audit and Risk Management: Conduct periodic reviews of regulatory frameworks and ensure that policies align with statutory mandates and judicial precedents.
• Building Legal Defensibility: Anticipate judicial scrutiny by prioritizing consistency in rule application and enforcement.

Navigating the Path Forward

Loper Bright is reshaping the administrative landscape, presenting both challenges and opportunities for federal, state, and local agencies and their respective legislative bodies. BRONNER’s internal audit and risk assessment services help agencies identify and implement best practices to identify, manage, and mitigate administrative, rulemaking, and enforcement risks, ensuring the agency fulfills its statutory mission effectively.

- Joel Emmerich, BRONNER Procurement & Contract Management Executive