By: Joseph Valcazar

The world was a very different place in 1984. Prince debuted his critically acclaimed Purple Rain album; The Terminator, Gremlins, and the Indiana Jones sequel dominated the box office; the future’s most popular video game, Tetris, was released; and, of course, the Supreme Court released its landmark Chevron v. Natural Resource Defense Council (Chevron) opinion. This case established the Chevron deference, a legal doctrine instrumental to the evolution of administrative law for over forty years. This doctrine was cited in more than 18,000 federal opinions. 

That was until 2024 when the current Supreme Court issued its opinion in Loper Bright Enterprises v. Raimondo (Loper Bright), effectively overruling Chevron. In an instant, the federal administrative state was turned on its head, leading to many questions about what the future holds for key administrative issues. And currently, there are few greater hot-button topics than artificial intelligence (AI).

What was Chevron Deference?

Chevron deference refers to a legal doctrine where courts afforded federal agencies, like the Food and Drug Administration or the Environmental Protection Agency (EPA), deference when interpreting ambiguous federal statutes. As long as these interpretations were deemed reasonable, courts would defer to the agency’s reasonable interpretation of the law, even when the courts may have preferred an alternative interpretation. 

For example, the dispute in the original Chevron case revolved around whether the term “source” in the Clean Air Act applied to individual equipment that emitted air pollution—such as smokestacks or boilers—or only to industrial plants on a whole as a source of pollution. The EPA interpreted “source” to cover the latter, allowing industrial plants to modify individual pieces of equipment without a permit so long as the total emissions of the plant did not increase. In a unanimous decision, the Supreme Court held the EPA’s interpretation to be reasonable, deferring to the agency and future agency interpretations and thus creating Chevron deference. 

This doctrine guided administrative action for forty years, influencing how Congress drafted its legislation. As Justice Kagan pointed out in her Loper Bright dissent, Congress would intentionally leave vague or ambiguous terms for agencies to resolve. Such as directing the Federal Aviation Administration to restore the “natural quiet” of the Grand Canyon National Park. 

Then Loper Bright happened. In one broad swoop, the Supreme Court overruled this long-standing precedent, or as Justice Gorsuch squarely put it, “[t]oday, the Court places a tombstone on Chevron no one can miss.” As a result, administrative law has entered a state of limbo. With deference removed, it is now up to the court’s independent judgment to decide when an agency has acted within its proper authority. There is no longer a barrier restricting courts from interjecting their own potentially conflicting interpretations of administrative statutes. Critics of Loper Bright express concerns that judges, who lack subject matter expertise on many complex matters, will create inconsistent rulings across jurisdictions. They worry this may lead to more confusion and uncertainty surrounding agencies’ authority. 

If true, these concerns have significant implications for an agency’s ability to react to novel technologies such as AI.

What’s the 101 on AI? 

To describe AI in simple terms, it is a form of technology that can perform advanced tasks and reach conclusions as a human would. This technology has experienced rapid growth in recent years. AI will seemingly touch every area of our lives. Whether it’s within your own home refining your Google search results, in healthcare as a tool to diagnose illness, or in business to automate key processes, AI is being widely adopted to reshape every aspect of our lives. This is not to say every use of A.I. is popular, or without its share of controversy. Examples, such as the use of AI in insurance denial claims, are just one of many reasons why some believe the ability to regulate AI is essential. Without proper governance of AI, privacy risks, system biases, and transparency concerns will exist, and what could be a net good could just as quickly become a net negative that abuses the public’s information. 

How Can Agencies Respond to Loper Bright?

With the complexity of AI, questions arise on how federal agencies should approach regulating such a novel technology. The answer is unclear in the wake of Loper Bright. Agencies may still interpret broad or ambiguous statutes; Loper Bright did not eliminate this power. However, actions related to AI and other hot-button issues will likely receive higher scrutiny from potential plaintiffs, leading to more litigation. Agencies may consider this fact when planning to issue new regulations. This could cause them to act more cautiously or strategically and thus respond less effectively to rapidly emerging issues.

Agencies may lean on issuing more guidance documents and statements that explain new regulations or clarify existing policy. However, these are not legally binding and non-enforceable. One advantage of this fact is that not every guidance document is currently subject to judicial review. Therefore, these guidance documents could be strategically utilized to advocate for specific policy positions without facing the scrutiny that a typical regulation would face. 

One pitfall of this strategy is that guidance documents are relatively limited in scope. In Appalachian Power Co. v. Environmental Protection Agency (EPA) (2000), the D.C. Circuit Court held that the EPA had improperly issued a guidance document because the guidance had the effect of a binding ruling on private and state actors. This case highlights how courts often do not enjoy attempts to evade judicial review. If agencies rely more on issuing guidance documents going forward, a likely outcome is courts choosing to exercise greater scrutiny over these documents to reduce any apparent workaround of Loper Bright. 

Conclusion

It’s unclear right now how agency actions will evolve in a post-Chevron world. The only thing that appears certain is that litigation will follow. The power paradigm between the judicial and executive branches has rapidly and significantly shifted. At a time when the private sector has just announced a $500 billion investment in AI, there are no signs that this emerging technology has any plans of slowing down. The next few years of governance will be critical in determining Loper Bright’s long-term effect on AI regulation. 

While this blog has focused primarily on the administrative state and its ability (or now lack thereof) to regulate this novel technology, agencies are not the only mechanism of governance that exists. As always, the legislature can draft and pass legislation regulating AI and its implementation. However, given Congress’s recent and current inefficiency, meaningful legislation around AI seems slim.