Goodbye, Chevron Loper Bright Enterprises

As tax planning practitioners, we do not typically see issues we deal with daily become the subject of cases before the United States Supreme Court. This term, we had the Connelly[1] case involving estate tax valuation of a decedent’s stock in a corporation funding a redemption buy-sell with corporate-owned insurance. Shortly thereafter, the Supreme Court issued its opinion in Loper[2] addressing the deference given to agency regulation. With a significant volume of tax law based on Treasury regulations, what deference that courts will give those regulations can be critically important in analyzing tax consequences, risks, positions, etc. The purpose of this writing is to discuss the Loper decision from that context.

Background – Chevron; Skidmore

To understand the importance of Loper, it is important to start with the status of the law before that opinion was handed down. The seminal case which courts used to analyze the validity of agency regulations is Chevron.[3] Since that case was decided, courts have applied the “Chevron doctrine” in determining the validity of agency regulations. Following that doctrine, two questions are raised:

  1. Whether Congress has directly spoken to the precise question at issue; and
  2. If the statute is silent or ambiguous with respect to the specific issue, whether the agency’s answer is based on a permissible construction of the statute.

Based on these questions, as long as Congress has not directly answered the issue addressed by regulation and the agency’s regulation is “a permissible construction of the statute,” then the agency’s regulation had the force and effect of law. This deference to an agency’s regulations has been referred to as “Chevron deference.” While Chevron has been the subject of much debate, those supporting Chevron deference largely cited to the subject matter expertise of executive agencies.

Prior to Chevron, agency guidance was largely tested under the Skidmore[4] standard. While Skidmore offered a certain level of deference to an agency’s determination, it was less deferential than Chevron. Generally, under Skidmore, an agency may have the “power to persuade” due primarily to the agency’s consideration, reasoning, and consistency. The agency’s expertise in the field will also be considered in analyzing the agency’s power to persuade a court. As such, as opposed to Chevron where an agency’s interpretation of an ambiguous statute would be enforceable if “a permissible construction of the statute,” Skidmore merely provides the ability of the agency to use its level of expertise, reasoning, consistency, and similar factors to favor its interpretation in persuading the court.

However, these questions do not arise if a statute is clear and unambiguous. Even under Chevron, if the relevant statute is clear and unambiguous as to the relevant issue, the second question above is not reached. Rather, the statute controls. This was seen in a somewhat recent case[5] involving an agency’s same-party joinder of inter partes review[6] of disputed patent claims. In that case, the statute governing the patent and trademark office’s was found to be clear and unambiguous after analyzed through “traditional tools of statutory construction.” That statute did not allow the intended joinder (the circumstances of which are not relevant here) even though such joinder was consistent with the agency’s position in interpreting the relevant statute.

The Court’s Decision

The regulation at issue in Loper involved regulations from the National Marine Fisheries Services requiring certain commercial fishing vessels to pay for an onboard observer to confirm compliance with agency requirements. The trial court, analyzing the issue under Chevron, finding that the statute (i.e. Congress) was silent as to the issue in question, deferred to the agency’s regulatory requirements. The Supreme Court, hearing cases consolidated from the First Circuit Court of Appeals and the Court of Appeals for the District of Columbia, agreed to address the question of whether statutory silence constitutes an ambiguity that requires deference to the agency’s regulations under Chevron.

In Loper, the Court clearly stated that “Chevron is overruled.” As such, the Court was clear that Chevron deference is a thing of the past. The Court’s reasoning was at least partially based on the Administrative Procedure Act which specifically states that courts must “exercise independent judgment in determining the meaning of statutory provisions” and decide “all questions of law.”  Based on this, courts should be the final arbiter of any ambiguity, not the relevant agency.[7]

The result is that courts are to interpret ambiguous statutes. In so doing, courts should look for the “best reading” of the statute “after applying all relevant interpretive tools.” The only exception is where “a particular statute delegates authority to an agency consistent with constitutional limits.” As such, when Congress specifically delegates authority to the agency within constitutional bounds, the agency’s interpretation will be given deference. However, when the statute delegates authority beyond constitutional limits, courts will not be bound by the agency’s regulations. While beyond the scope of this writing, this may open the door for litigation over the boundaries of the “major questions doctrine” (regulations with “vast economic and political significance” absent express delegation) and the “non-delegation doctrine” (limitations on the scope of delegation authority to agencies, effectively requiring Congress to set forth an “intelligent principal” to be applied in regulations) each of which limit the authority of agencies based on constitutional principles.

Although this decision was seen as opening decades of consistent law to court challenges, the majority stated that principals of stare decisis (Latin for “to stand by things decided”) should continue to apply to regulations previously upheld under Chevron. According to the majority opinion, those cases remain good law notwithstanding that the case which supported their enforceability is now no longer good law.


It is far too early to know the full scope of how the IRS, taxpayers, and courts, will adjust to the new Loper decision. However, as the law develops, certain potential consequences are worth considering for tax planning. Some potential consequences of Loper may include:[8]

  • One quite obvious consequence is that much more statutory interpretation will be in the hands of courts rather than administrative agencies. Not only is this likely to give taxpayers more of a voice, but it also creates a shift to a different branch of government with different political and other consequences. Further, this can result in inconsistent decisions by courts around the country resulting, possibly, in a patchwork of federal tax law around the country.
  • There will be more challenges to tax regulations (including refund claims, protective or otherwise, for previously filed returns based on regulations that may be subject to challenge). This, again, seems obvious. While the Court indicated that cases already decided under Chevron which upheld regulations remain good law, there are plenty of regulations that have not been subject to Chevron review, and Treasury issues new regulations frequently. Also, we do not know the boundaries of the Court’s admonition regarding the stare decisis effect of prior case law.
  • With the new potential for challenges to regulations that otherwise, for better or worse, would have been seen as practically uncontestable under Chevron; the increased chance of taxpayer challenges to old and new regulations; and the subjective nature of the “best reading” standard; there will be materially increased uncertainty. Taxpayers will not know, until someone challenges regulations through the courts (and, even then, not until their appellate circuit or the U.S. Supreme Court rules), whether regulations that govern their affairs will ultimately be upheld.
  • Congress may more carefully tailor statutes, including their delegation of authority to agencies. If agency deference is heightened when there is express legislative authority, then agencies are likely to work with Congress to cover issues previously left to regulation in statute or to directly authorize certain regulatory authority. The need for this is heightened by the primary issue in Loper being whether silence can be considered to create an ambiguity; coupled with the notion that only ambiguous statutes may be subject to regulatory guidance, it will be critically important for Congress to expressly delegate regulatory authority where appropriate and to do so in the context of constitutional limits.
  • Given the Skidmore factor favoring consistency and the Loper citation to “every statute’s meaning is fixed at the time of enactment,” it will be more challenging for the IRS to change preexisting regulations or to delay promulgation of regulations until many years after the relevant statute became law.[9] Skidmore may tend to favor the agency’s interpretation, but much less so than Chevron and subject to different standards. The difference between a “permissible construction” and the “best reading,” especially when applied in conjunction with these standards, will make it difficult for the IRS to prevail when changing regulations or acting years after a statute passes.[10]
  • Regulations may be more taxpayer friendly. A Congressional Research Service report found that 88% of agency staff drafting regulations either agreed or somewhat agreed that Chevron allowed them to feel more willing to be aggressive in statutory interpretation.[11] Without the benefit of Chevron deference, regulation drafters will need to be more conservative in their positions. Again, this is heightened by the Skidmore factors in analyzing an agency’s “power to persuade.”
  • I question whether one consequence is that the IRS will seek issuance of fewer regulations, at least when Congress does not expressly delegate authority to Treasury to benefit from deference to Congress’ power to delegate. If their regulations will not be given much more deference than other forms of guidance (such as Revenue Rulings, Revenue Procedures, Notices, etc.), then why bother with the requirements of the Administrative Procedure Act? While I do not intend to indicate I think tax regulations will be a thing of the past, Treasury may tend to relegate what once would have been drafted into regulation to less authoritative forms of agency guidance.


Loper marks a major shift in administrative law. Although this writing is based on my view as a tax planner, the reverberations will be felt throughout many areas of the law. As with almost any significant development, only time will tell what ultimately comes from this decision. However, at the very least, there has been a shift of power from the executive to the judicial branch. Given that agencies will likely be granted some form of persuasive deference under the Skidmore standard and the reaction of Congress and agencies to Loper (i.e. direct delegations of authority, agencies documenting Skidmore favorable facts, etc.), most regulations are still likely to be upheld. This does not mean that taxpayers do not have a stronger voice. The requirements of Loper and Skidmore provide a much more meaningful avenue for taxpayers to challenge tax regulations and a greater likelihood for success. It is much easier for an agency to articulate “a permissible construction” than to prove theirs is the “best reading.”

[1] Connelly v. U.S., 144 S.Ct. 1406 (2024). After the trial court’s opinion, I wrote about this case in Gray Edmondson, “What is Your Business Worth? Buy-Sell and the Connelly Case.” Nov. 4, 2021,

[2] Loper Bright Enterprises v. Raimondo, 2024 WL 3208360 (U.S. June 28, 2024). The opinion of the Court was delivered by Roberts, joined by Thomas, Alito, Gorsuch, Kavanaugh, and Barrett with Thomas and Gorsuch filing concurring opinions. Kagen filed a dissent which was joined by Sotomayor and, in part, by Jackson. Justices Gorsuch and Thomas also argued that constitutional standards, in addition to the Administrative Procedure Act, support the majority’s conclusions.

[3] Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 831 (1984); see also Mayo Foundation v. U.S. 562 U.S. 44 (2011), confirming that tax regulations also are tested under Chevron for validity. To some degree, the outcome in Chevron dates back much earlier when the Supreme Court recognized that executive agencies are to “fill up the details” of a Congressional statute’s “general provisions.” See Wayman v. Southard, 23 U.S. 1 (1825).

[4] Skidmore v. Swift, 323 U.S. 134 (1944). See also National Muffler Dealers Association v. U.S., 440 U.S. 472 (1979), which looks to “whether the regulation harmonizes with the plain language of the statute, its origin, and its purpose;” whether the regulation was promulgated “substantially contemporaneous[ly]” with enactment of a statute such that Treasury may be “presumed to have been aware of congressional intent;” and whether the administrative interpretation was consistent and longstanding and the subject of taxpayer reliance.

[5] Facebook, Inc. v. Windy City Innovations, LLC, 973 F.3d 1321 (Fed. Cir. 2020).

[6] Inter partes review generally is a proceeding conducted at the Board level of the United States Patent and Trademark Office to review patentability of claims in certain limited circumstances.

[7] Interestingly, the Administrative Procedure Act predates Chevron and, in recent years, the Administrative Procedure Act has been successfully used by taxpayers in litigation with the IRS. See, e.g., CIC Services, LLC v. IRS, 141 S.Ct. 1582 (2021).

[8] To be clear, this is not an exclusive list, nor is it intended to fully describe the items listed. Rather, these potential consequences are among this writer’s thoughts, some supported by others, of what may be coming.

[9] See, e.g., Smiley v. Citibank (South Dakota), N.A., 517 U.S. 735 (1996).

[10] Further consider how this impacts regulations issued in the midst of IRS enforcement action, including litigation, against certain perceived abuses or when there is a change in Presidential administrations with different policy goals. Did Treasury just find a new interpretation of an old statute to support their current position? Do the new regulations adopted many years, even decades, after the statute was enacted reflect legislative intent when the law was passed? Are changes to regulations consistent with preexisting interpretations? Etc.

[11] Congressional Research Service Report, April 8, 2024.


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