In a 6-3 decision, the Supreme Court today overturned the Chevron doctrine, a precedent that has allowed federal agencies significant authority to interpret ambiguous laws. This ruling, decided along ideological lines, fundamentally changes how regulations will be implemented and challenged moving forward.
Chief Justice John Roberts, writing for the majority, stated that courts must now exercise their independent judgment in interpreting laws, rather than deferring to agency interpretations. This decision stems from the cases Loper Bright Enterprises v. Raimondo and Relentless v. Department of Commerce, which challenged regulations set by the National Marine Fisheries Service under the Magnuson-Stevens Act. Going forward, judges will use their own judgment to interpret laws rather than deferring to agency interpretations. This makes it easier to challenge and overturn agency regulations.
Here are the key takeaways:
- Going forward, judges will use their own judgment to interpret laws rather than deferring to agency interpretations. This makes it easier to challenge and overturn agency regulations.
- Chief Justice Roberts wrote that “Chevron is overruled” because it “defies the command” of the Administrative Procedure Act governing federal agencies.
- The ruling argues that “agencies have no special competence in resolving statutory ambiguities. Courts do.
What it means for the industry:
- Regulations from the CFPB, FTC and other agencies will be more vulnerable to legal challenges.
- Courts will have more power to strike down or modify agency rules they deem unreasonable.
- It may become harder for agencies to issue new regulations or enforce existing ones without explicit Congressional authorization.
- Industry groups will likely have more success challenging unfavorable regulations in court.
The Supreme Court’s decision to overrule the Chevron doctrine marks a significant shift in the balance of power between the judiciary and federal agencies. As courts take a more active role in interpreting laws, the industry’s regulatory framework will be more unpredictable, requiring businesses to be agile and proactive in their compliance and legal strategies.
In a dissenting opinion, Justice Elena Kagan said, “A rule of judicial humility gives way to a rule of judicial hubris,” adding, “A longstanding precedent at the crux of administrative governance thus falls victim to a bald assertion of judicial authority. The majority disdains restraint, and grasps for power.”
