There has been no shortage of criticisms of the Loper Bright decision. Justice Elena Kagan in her dissent called it a “major shock to the legal system.” Kate Shaw of the University of Pennsylvania Law School says it “has the potential to fundamentally transform major aspects of the health, safety, and well-being of most Americans.” But other commentators say the decision will have very limited real-world effects on policy. Peter Van Doren argues in this Special Section that the ruling does not change the fundamental equilibrium of Congress passing ambiguous statutes that, for one reason or another, do not result in concomitant regulation. Kristen Hickman and Nicholas Bednar argued in a 2017 law review article that deference by courts to agency expertise is inevitable regardless of the doctrinal framework.

I believe there is some merit in each of these arguments. My best guess is that, in the short run, Loper Bright’s effect is likely to be substantial because of the uncertainty it creates for agency officials and judges. In the longer run, however, the equilibrium noted by Van Doren and Hickman and Bednar is likely to be restored.

Risk aversion/​ To understand Loper Bright’s likely short-run implications, it is important to understand the structure of rulemaking in federal agencies. While agency experts generally craft the substance of new regulations, most agencies require the agreement of their general counsel’s offices before moving forward with the regulation.

Agency experts tend to be ambitious and committed to the mission of the agency: Few people choose to spend their career at the Environmental Protection Agency because they oppose environmental protection. As the bureaucratic literature often observes (Downs 1965; Wilson 2019), mission is very important in the motivational structure of public servants.

However, general counsel’s offices are typically governed by professional norms as much as by policy preferences. And like most attorneys, those that work for federal regulatory agencies are risk averse, generally preferring to err on the side of crafting regulations that are likely to survive judicial review, even if that means sacrificing the goals of their more zealous colleagues in program offices. This risk aversion, combined with the deference these offices usually are given, means that, despite the stereotype of overreaching agencies, agency regulations are often more conservative than preferred by many at the agency.

This is where Loper Bright is likely to have its biggest effect. Even in a world of Chevron deference, agency attorneys were cautious about which regulations they allowed to be put forward. Loper Bright, at least initially, will increase the uncertainty over how courts will adjudicate regulatory cases. The increased uncertainty will lead to longer review times for regulations within agencies, more intra-agency disputes over regulatory decisions, and—consequently—fewer regulations making it through the gauntlet of the internal regulatory process that is largely invisible to the public.

Then comes review by the Office of Information and Regulatory Affairs (OIRA) at the Office of Management and Budget. (I worked at OIRA from 1998 to 2003.) President Bill Clinton’s Executive Order 12866 requires agencies to submit significant regulations to OIRA for review both at the proposed-rule and final-rule stage. OIRA reviews the regulations both for analytical soundness and compliance with the president’s preferences (Shapiro 2005), and it may also raise issues regarding the legal soundness of the agency’s regulatory initiative. With the demise of Chevron, these issues are likely to play a more prominent role in OIRA review, with its lawyers not wanting to trigger a legal challenge. This caution will dampen regulatory output further. One or two adverse court decisions that cite Loper Bright will likely strengthen risk-averse voices within the bureaucracy.

Thus, in the short term, I expect that agency regulatory output will slow because of Loper Bright. Agencies will feel the need to better understand the new legal climate in which they are operating, and they will be cautious in issuing new regulations.

One qualifier to this is the possibility of a second Donald Trump administration that does not react according to the traditional incentives facing the executive branch. Candidate Trump has stated his intention to remove some career bureaucrats and replace them with political appointees interested in advancing his agenda rather than establishing long careers in civil service (Firey 2024). In their zeal, agencies with overeager political appointees may not hesitate to issue new deregulatory initiatives. However, if these efforts are done quickly and carelessly, they will likely run aground in the courts (Coglianese et al. 2021) and Loper Bright may be cited as the legal justification for their failure.

Long term / In the long run, however, I suspect our current equilibrium is likely to be restored. Eventually, the courts will begin upholding regulatory initiatives under the new regime. Agencies will regain confidence in their ability to regulate (or deregulate). It may just take a while to get there.

Readings

  • Bednar, Nicholas R., and Kristin E. Hickman, 2017, “Chevron’s Inevitability,” George Washington Law Review 85(5): 1392–1461.
  • Coglianese, Cary, Natasha Sarin, and Stuart Shapiro, 2021, “The Deregulation Deception,” University of Pennsylvania Law School, Public Law Research Paper 20–44.
  • Downs, Anthony, 1965, “A Theory of Bureaucracy,” American Economic Review 55(1–2): 439–446.
  • Firey, Thomas A., 2024, “Schedule F: The Phantom Menace,” Regulation 47(1): 40–45.
  • Shapiro, Stuart, 2005, “Unequal Partners: Cost–Benefit Analysis and Executive Review of Regulations,” Environmental Law Reporter News & Analysis 35(7): 10433.
  • Shaw, Kate, 2024, “The Imperial Supreme Court,” New York Times, June 29.
  • Wilson, James Q., 2019, Bureaucracy: What Government Agencies Do and Why They Do It, Basic Books.