What would a decline in respect for Chevron mean for economic regulation?

The future of the administrative state hangs in the balance. Supreme Court judges will soon decide in two cases whether to invalidate a precedent that has been in force for several decades, known as the so-called Chevron respect, which would limit the power of federal agencies to regulate everything from Wall Street to the stove in your kitchen. This Washington Examiner the series will look at how a departure from this precedent could tear the regulated nation apart. Part 1 focused on the basic court case. Part 2 examines the possible economic impacts.

The Supreme Court appears poised to overturn or reverse a long-standing ruling on how agencies interpret ambiguous statutes, a move that has major implications for regulation of many aspects of commerce.

The decision to overturn a 40-year-old precedent known as Chevron deference, or the Chevron doctrine, will have repercussions across the business world, influencing regulation in areas as diverse as finance, health care and technology.

As a result, the so-called Chevron doctrine was created Chevron v. Natural Resources Defense Councila 1984 Supreme Court ruling that courts should defer reasonable interpretations of ambiguous statutes by federal agencies.

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Many business and industry groups say the doctrine has led to punitive regulations that are bad for business. The federal government, however, maintains that precedent respects the courts’ authority to interpret the law while upholding the legislature’s ability to delegate authority to executive branch agencies.

Industry groups and corporations complain that Chevron’s deference makes it too easy for new presidential administrations, Republican or Democratic, to change or reverse the interpretation of federal law.

Chevron’s expected reversal or clampdown could trigger a wave of litigation as corporations and groups challenge long-standing rules.

The cases in question that led to the Chevron repeal action began with fishermen upset over the Magnuson-Stevens Fisheries Conservation and Management Act’s interpretation.

Essentially, the lawsuits were brought by a group challenging the National Marine Fisheries Service’s mandate that forces some fishing companies to pay for and maintain herring monitors at sea. The companies claim that Congress has never authorized NMFS to require commercial fishermen to pay for offshore monitors.

“Fundamentally, this is about regulated pay for regulators,” said Karen Harned, legal director at the conservative Job Creators Network. “From their perspective, it was a great case to really show what the problems are with the Chevron doctrine.”

Marc Wheat, general counsel of Advancing American Freedom, said deferring to Chevron would be “one of the most important decisions probably of our lifetimes.”

Wheat said that now federal agencies can aggressively push the boundaries of any understanding of the statute’s meaning in the hope that courts will simply “sort of mindlessly apply” the Chevron doctrine.

“This really applies to every industry — every agency,” Wheat said.

The liberal group Center for American Progress listed several specific economic regulations that could be at risk if the Supreme Court overturns the precedent.

The Consumer Financial Protection Bureau under Biden proposed a rule last year limiting credit card late fees to $8 and added guidelines aimed at stopping banks from charging what the Center for American Progress calls “junk fees” for basic customer service. The group argues that these CFPB protections could be invalidated if Chevron is eliminated.

Some say rulemaking by the Occupational Safety and Health Administration and the National Labor Relations Board could also be at risk, given their reliance on deference to Chevron.

For example, a federal court in Texas recently used Chevron’s deference to uphold the Department of Labor’s ability to impose minimum wage requirements on employers in order to obtain overtime exemptions for workers classified as “executive, administrative, or professional” employees.

“If Chevron had not filed the request, companies would have experienced a greater administrative burden by having to test each employee’s duties to determine whether he or she qualifies for overtime work,” CAP says.

However, conservatives will generally be happy with Chevron’s collapse, arguing that its collapse will result in fewer economic regulations that they consider excessive.

“Chevron has committed a great deal of violence against our constitutional order,” Wheat said. “When Chevron is gone, we will see a lot of overly stringent regulation being scrapped, and I think that will be reflected in economic performance.”

Devin Watkins, a lawyer at the Libertarian Institute for Competitive Entrepreneurship, said: Washington Examiner that a few large companies and large industries have enormous influence over the actions of federal agencies. However, smaller enterprises, e.g. family ones, have little influence.

“So I think it will probably … shift a lot of economic policy away from benefiting large businesses, as the agencies tend to think, to more smaller businesses and people who don’t have the ability to influence the agencies,” Watkins said. decision limiting Chevron’s respectability.

OH Skinner, executive director of the conservative Consumer Alliance, said phasing out Chevron would be a boon for consumers because it “fundamentally changes what these agencies can get away with.” He said the government is using this to introduce radical changes.

As an example, Skinner cited the Biden administration’s efforts to use efficiency standards to promote electric vehicles and discourage the use of fossil fuels.

“They’re changing the standards for refrigerators, stoves, water heaters, dishwashers, washers and dryers – on every single product, they’re massively reinterpreting regulations and policies to try to remove things that people shouldn’t buy,” Skinner said. “Every time they do this, they take an existing statute or an existing rule and just completely reinvent it.”

Joel Zinberg, a senior fellow at the Competitive Enterprise Institute, said that if Chevron is significantly weakened or brought down, there could be a flurry of litigation to challenge the regulations. This would enable the court to familiarize itself with the interpretations of the provisions that have so far been upheld in the doctrine.

Zinberg said that in the long term, a ruling to decertify Chevron could provide greater regulatory certainty because it would mean that the rules would not change when the president took office.

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“The Reagan administration’s view of the EPA was very different from the Obama or Biden administration’s view of the EPA,” he said.

Zinberg also said that in the long run, Congress may end up crafting laws in a more responsible way, meaning lawmakers will be much more specific about what they want the bill to say or do, leaving less leeway for the administration.