Biden Deals Blow as Supreme Court Overturns Chevron Deference

The U.S. Supreme Court’s timely decision to limit the powers of the executive branch, which came hours after President Joe Biden’s lackluster debate performance, will make it harder for his administration to fulfill its biggest policy ambitions before the November election.

By finding that regulatory agencies have no discretion to interpret the meaning of ambiguous regulations, the court made it harder for the administration to defend rules it has issued in recent months aimed at combating climate change, forgiving student debt and cracking down on so-called “junk fees,” all of which are key words Biden has been telling voters during his re-election campaign.

The decision eliminated a 40-year-old court precedent known as Chevron deference, which built on a series of earlier opinions that limited the agency’s policymaking authority. Many of Biden’s policy goals are based on executive branch interpretations under older laws or on rulemaking in which Congress called for standards but left them up to agencies to create.

“This is as extreme a repudiation of the Chevron decision as anyone could have expected,” said Sharon Block, former leader of the Biden Office of Information and Regulatory Affairs, which oversees the rulemaking process at the White House. “I don’t see any respect for the agency’s competence.”

The ruling came the morning after Biden repeatedly stumbled over his answers during the first presidential debate of the general election. The performance, punctuated by slurred lines and coughing, heightened concerns among allies that he would lose to former President Donald Trump in November and prompted calls for him not to run again.

“While this decision undermines the ability of federal agencies to use their expertise as Congress intended the government to work for its people, the Biden-Harris Administration will not relent in our efforts to protect and serve every American,” said Press Secretary Karine Jean -Pierre – the statement said.

“The President has directed his legal team to work with the Department of Justice and other agency attorneys to carefully review today’s decision and ensure that our Administration is doing everything it can to continue to leverage the extraordinary skills of the federal workforce to keep Americans safe and communities thriving,” the statement said.

Biden has pursued an ambitious regulatory agenda throughout his presidency. His most recent to-do list, released in December, included 2,524 items—40 percent of which the administration expected to complete, according to an analysis of the list by Bloomberg Government.

“The courts are saying we must follow the language of Congress’s express authorization at a time when Congress is at its weakest and is either failing to legislate or keeping the statutes ambiguous,” said Marc J. Scheineson, a partner at Alston & Bird LLP who represents companies in Food and Drug Administration courts, in a statement before the decision.

Climate change

The Environmental Protection Agency’s proposed rules to limit power plant emissions hinge on the scope of its Clean Act authority to set pollution standards. More than two dozen states have joined rural power companies and coal advocates in challenging the rules, calling them an unlawful attempt to overhaul the nation’s power system.

Biden’s flagship climate law, the Inflation Reduction Act (Public Law 117-169), separately fines the oil and gas industry for methane emissions. Lawmakers left it to the EPA to decide how to calculate penalties and what companies can do to avoid fees. Methane is the second largest contributor to global warming after carbon dioxide.

In January, the EPA proposed charging energy producers $900 per ton for excess methane emitted this year, rising to $1,500 per ton by 2026.

Senate Energy Committee Chairman Joe Manchin (D-W.Va.) said in March that the proposals were “inconsistent with congressional intent” and urged the administration to make the fees more flexible. The EPA has not yet finalized the fees.

Student loans

Easing student debt is part of Biden’s pitch to younger voters. He wants to use the Higher Education Act (Public Law 89-329) to reduce student debt for up to 26 million Americans, after the Supreme Court in 2023 blocked his original plan to use pandemic-related emergency powers to forgive loans for more borrowers.

Friday’s decision gives Republicans another tool to stop future rounds of debt relief, arguing that the actions exceed the authority Congress has granted to the Education Department.

Two federal judges on Monday temporarily halted Biden’s plan to accelerate forgiveness for some borrowers, one of the administration’s latest moves to reduce student debt.

The Biden administration does not have “explicit congressional authority” to implement the plan, wrote Judge Daniel D. Crabtree of the U.S. District Court for the District of Kansas.

Tax

The IRS is writing a proposal for a Corporate Alternative Minimum Tax, known as CAMT. The plan would specify how the tax would be calculated, after Congress directed the agency to make that decision.

The law requires companies to pay tax of at least 15 percent of reported income if they don’t already. The agency said in June it would waive penalties for underpayments of tax after companies struggled to calculate their obligations.

Taxpayers are waiting for more details.

Garbage fees

Agency lawyers have cited years-old regulations to justify efforts to eliminate junk fees, as Biden called hidden fees, rather than waiting for Congress to pass laws regulating specific costs.

Bank overdraft fees would drop to just $3 under a January proposal by the Consumer Financial Protection Bureau. Lawyers for the agency cited a 1978 law to protect the rights of customers who send money electronically. The banking industry responded with a 21-page letter arguing that Congress has not given the agency permission to force the industry to lower the fees.

In Friday’s Supreme Court decision, Associate Justice Neil Gorsuch echoed similar language, writing that the Biden administration cannot write regulations without express approval from Congress.

Opponents of regulatory action will have an easier time invalidating rules that are not expressly required by law, forcing agencies to slow down and be more careful in formulating policy, left-leaning administrative law lawyers say.

“It gives a green light to any aggrieved corporation to sue to get rid of an inconvenient regulation,” said K. Sabeel Rahman, a professor at Cornell Law School and a former leader of Biden’s OIRA.