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After 40 years of Chevron deference, Loper Bright is now the law of the land and requires federal courts to exercise independent judgment in deciding whether an agency has acted within its statutory authority. Under this new standard, the Department of Labor (DOL) is not accorded the same deference in interpreting the Employee Retirement Income Security Act (ERISA) as it had enjoyed previously. ERISA plans and their administrators are likely to feel the aftershocks of the Supreme Court’s earth-shaking administrative law decision in 2025 and beyond.
Chevron v. NRDC (S. Ct. 1984) instructed federal courts to defer to reasonable agency interpretations of ambiguous federal statutes on the grounds that agency experts were better suited than federal judges to make such interpretations. The Supreme Court decision in Loper Bright Enterprises v. Raimondo, however, overturned Chevron and commands federal courts to exercise their own independent judgment in deciding questions of interpretation. Agency interpretations may still be treated as persuasive authority, however, especially regarding matters within the agency’s expertise. Importantly for ERISA, Loper Bright is inapplicable where Congress has expressly delegated authority to a federal agency to promulgate regulations.
Loper Bright, along with another Supreme Court decision, Corner Post, Inc. v. Board of Governors of the Federal Reserve System, provides powerful tools for challenging agency actions, even decades after they occur. In Corner Post, the Supreme Court permitted a business that did not open until 2018 to challenge a Federal Reserve rule from 2011. In so doing, the Court held that a cause of action under the Administrative Procedure Act (APA) does not accrue until a party is injured, seemingly extending the APA’s six-year statute of limitations.
Loper Bright and Corner Post are already changing how courts handle challenges to ERISA regulations.
The district court in Fed’n of Ams. for Consumer Choice, Inc. v. DOL (E.D. Tex.) applied Loper Bright to enjoin the effective date of a 2024 DOL rule that broadly redefines fiduciary under ERISA. Plaintiffs, insurance agents selling tax-qualified annuities, argued that DOL’s redefinition of “investment advice fiduciary” would improperly make them fiduciaries, subjecting them to significant compliance burdens and potential liability under ERISA. The court stated that, under Loper Bright, it owed no deference to DOL’s interpretation because DOL impermissibly reinterpreted the 50-year-old term and accepting DOL’s interpretation would grant DOL unlimited power to rewrite ERISA.
- Under Loper Bright, federal courts must now exercise independent judgment in deciding whether an agency acted within its statutory authority
- The holding in Corner Post expands the ability to challenge long-standing regulations and agency decisions, notwithstanding statute of limitation concerns
- Loper Bright is likely to be the basis for a number of challenges to DOL regulations in the highly-regulated ERISA space in 2025 and beyond