In eliminating the Chevron doctrine, Loper Bright Enterprises v. Raimondo changed the landscape of administrative law in ways that courts, litigants, and legal scholars are still sorting out a year later. Loper Bright held that courts should exercise “independent judgment” to determine the “best reading” of statutory language without deferring to agencies’ interpretations. While the Court tempered the impact of this holding in important ways, some federal agencies are misapplying those caveats. (For a lengthier discussion of key aspects of Loper Bright and other recent Supreme Court decisions that agencies must keep in mind when pursuing deregulatory efforts, see a recently-published report that we co-authored.)

In Loper Bright, the Court noted that the best reading of a statute “may well be that the agency is authorized to exercise a degree of discretion”—meaning that a single best statutory reading can often allow for numerous different policy options.  And second, the Court clarified that its holding does not “call into question prior cases that relied on the Chevron framework” to uphold specific agency actions; instead, those cases “are still subject to statutory stare decisis despite [the Court’s] change in interpretive methodology.” Reliance on Chevron alone is “not enough to justify overruling a statutory precedent.”

Stare decisis is the principle that courts should adhere to prior decisions when deciding cases that present the same issue. When a court decides a question of statutory interpretation, the Supreme Court has said that stare decisis applies with extra force. Because Congress can correct any mistake of statutory interpretation that a court makes by amending the statute, a court’s interpretive decision “effectively becomes part of the statutory scheme” unless Congress amends the law in response.

By preserving the statutory stare decisis effect of Chevron cases, Loper Bright ensures that forty years of caselaw does not immediately vanish. And this aspect of Loper Bright applies not only when courts assess a precedent that relied on Chevron; it also has profound ramifications for agencies. Because Loper Bright does not overrule prior Chevron decisions, agencies are not compelled to rescind or modify regulations that were previously upheld under the Chevron framework—even if the agency believes that a current regulation does not reflect the best reading of the statute. In other words, agencies may choose to rescind or modify such regulations when their new interpretation is consistent with the statute’s best reading, but they may also lawfully maintain them.

Because Loper Bright does not compel agencies to rescind or modify rules, an agency that decides to rescind or modify a regulation consistent with what it now believes is the statute’s best reading is making a voluntary decision. And because the agency is making a choice between two lawful options, it is not reaching a nondiscretionary, legally-mandated conclusion; it is making a choice, subject to the usual procedural requirements of “reasoned decisionmaking.” This means the agency is obligated to justify any regulatory rescission with a “reasoned explanation . . . for disregarding facts and circumstances that underlay or were engendered by the prior policy,” which includes considering the impacts of the rule being rescinded and any reliance interests that it engendered.

A recent notice of proposed rulemaking from the U.S. Fish and Wildlife Service and the National Marine Fisheries Service misapplies this crucial aspect of Loper Bright. The agencies seek to rescind the definitions of “harm” in the Endangered Species Act regulations, based on their conclusion that the current definitions “do not match the single, best reading of the statute,” per Loper Bright. But as the notice acknowledges, the Supreme Court upheld the current regulatory definitions in Babbitt v. Sweet Home Chapter of Communities for a Great Oregon. And even though Loper Bright emphasized that cases like Sweet Home remain good law, the agencies claim that the rescission is “compelled” by law because they have concluded that the definitions do not reflect the best reading of the statute. The agencies then go further, asserting that the rescission is thus a “nondiscretionary action,” meaning they “do[] not have authority” to consider otherwise relevant policy or factual issues such as the repeal’s environmental effects.

But the agencies’ conclusion misunderstands Loper Bright’s discussion of statutory stare decisis. Because the current regulatory definitions were previously upheld in Sweet Home, they remain good law after Loper Bright. The agencies could choose to maintain them and are not legally compelled to rescind them even if, as the agencies claim, they are inconsistent with the statute’s best reading. Accordingly, the agencies’ decision to rescind the regulations is voluntary, not “nondiscretionary”—and the agencies therefore do need to rationally consider relevant policy and factual issues in order to satisfy the requirements of reasoned decisionmaking.

The agencies’ legal misstep has tangible consequences. Because the agencies incorrectly believe that the rescission is legally compelled and “nondiscretionary,” the proposed rule lacks substantial factual and policy analysis. If finalized in this form—short on factual analysis, containing only legal arguments, and omitting consideration of the rescission’s impacts—the rule risks being set aside by a court for being “arbitrary and capricious,” regardless of the best reading of the statute.  

As law professor Jonathan Remy Nash explains in a recent law review article, the import of Chevron cases post-Loper Bright remains unclear and could use more clarification from courts. But the approach taken in the Endangered Species Act rule is the wrong answer, because an agency’s decision to rescind a rule upheld under Chevron is a voluntary choice, not a legal requirement. And this means that the agency must satisfy the normal requirements of reasoned decisionmaking, including thorough factual and legal analysis, consideration of alternatives, and weighing of reliance interests. Agencies cannot avoid these legal requirements simply by claiming that the law demands deregulation.

Jack Jones is a legal fellow at the Institute for Policy Integrity at NYU School of Law, where Max Sarinsky is the Regulatory Policy Director. This post does not purport to present the views, if any, of NYU School of Law.