Business Impact: Supreme Court Ruling to End Chevron Doctrine Moves Federal Regulation Out of Agencies and into Courts

On June 28, 2024, the U.S. Supreme Court ended the Reagan-era doctrine known as the Chevron Doctrine of Deference. Chevron allowed federal agencies to reasonably interpret ambiguous federal laws, giving the agencies, and by extension the President, the authority to make laws outside of Congress. In other words, federal agencies responsible for enacting legislation were given the final say on the implementation and creation of rules resulting from the enacted legislation.

Repealing the 40-year statute of limitations doctrine dramatically limits the power of current and future presidents by requiring Congress to be more explicit in its direction of agencies and cautious about their reach.

In recent years, the Biden administration has used Chevron to pass new climate regulations through the Environmental Protection Agency, implement noncompete laws through the Federal Trade Commission and expand overtime pay eligibility through the Department of Labor. Despite today’s Supreme Court ruling, the Biden administration’s actions stand. But future actions are now under scrutiny.

An example of future impacts would be IRS guidance, which taxpayers have long relied on. Many acts of Congress are merely sentences requiring the IRS to promulgate and implement regulations related to a particular tax, resulting in hundreds of pages in the IRS’s regulatory section. Now, any announcement from the IRS or Treasury is more susceptible to challenges.

The changes pose some challenges for this administration, especially with regard to student loan forgiveness, sweeping climate change legislation, artificial intelligence guidelines and Medicare’s ability to negotiate drug prices. A district court judge on June 28, following a Supreme Court decision, halted the Department of Labor’s expanded overtime rules for Texas public employees. That expansion went into effect July 1, and the district court signaled a nationwide ripple effect.