Prepare for new complications as big tech companies wind down after Supreme Court changes regulatory rules • The Register

Analysis The U.S. Supreme Court has ruled that judges should no longer rely on government agencies’ interpretations of vague laws, a decision that could have potential ramifications for some of the largest cases against tech companies.

This deference, known as the Chevron deference, dates back to 1984, when a court ruled in a case Chevron vs. Natural Resources Defense Council that the U.S. Environmental Protection Agency may define ambiguous terms in government legislation as long as the agency endeavors to apply the law consistent with congressional intent.

Last week, the Supreme Court overturned this 40-year-old precedent in a decision covering two cases – Loper Bright Enterprises v. Raimondo AND Relentless, Inc. v. Department of Commerce – on whether the U.S. National Marine Fisheries Service can force U.S. fishing vessels to pay salaries to federal observers in the absence of specific regulations on the matter.

“The Administrative Procedure Act requires courts to exercise independent judgment in determining whether an agency acted within its statutory authority, and courts may not rely on an agency’s interpretation of the law merely because the statute is ambiguous; Chevron’s ruling is reversed,” the justices wrote by a 6–2 majority (PDF).

Most people today claim exclusive authority over any open issue – no matter how expert-based or politically charged it may be.

Justice Elena Kagan, in a dissenting opinion joined by Justice Sonia Sotomayor, called the ruling an attempt to seize judicial power because it encourages judges to make decisions that were previously entrusted to government agencies and expert personnel.

“In one fell swoop, the majority today arrogates to itself exclusive authority over every open issue—no matter how expert-based or policy-laden—including the meaning of regulatory law,” Kagan wrote. “As if it didn’t have enough on its plate, the majority is turning itself into the country’s administrative czar.”

Justice Ketanji Jackson Brown recused herself from the Loper ruling — likely because of her prior involvement in the dispute at the appellate level — but joined in a dissenting opinion that referenced the 6-3 majority ruling in Relentless.

The ruling could severely limit the effectiveness of U.S. regulators such as the Federal Trade Commission (FTC) and the Federal Communications Commission (FCC) and thus change the way the technology industry is regulated.

The FTC, for example, is engaged in antitrust battles with Adobe over subscriptions, all the big AI players, and is being questioned for scrapping a key pillar of Silicon Valley, the noncompete agreement. After Chevron’s rejection, the latter could prove to be a test case for the new business order.

As for the FCC, many fear that the entire net neutrality issue could be up for grabs—again—if it turns over control of the issue to the judges. Telecom companies are not fond of the FCC, and you can expect them to challenge every fine and reprimand just to get new rules.

Follow the money

The New York Times reported that the anglers in the Loper Bright case were represented by lawyers from Americans for Prosperity, a group funded by petrochemical billionaire Charles Koch, a frequent opponent of regulation.

Patrick McLaughlin, director of policy analysis and senior fellow at the Mercatus Center at George Mason University, a center run and funded by Koch, called the court’s decision a positive step from a governance perspective.

“Under the Chevron rule, if an agency interpreted an ambiguous statute one way and others (presumably regulated entities) interpreted it another way, the tie would go to the agency—courts would rely on the agency’s presumed expertise,” he wrote in a post last week. “Now, in a post-Chevron world, regulatory agencies will have to justify their interpretations of ambiguous statutes without the benefit of deference to the agency in the event of a tie.”

The National Taxpayers Union Foundation (NTUF) welcomed the Supreme Court’s decision, pointing to its potential impact on the Internal Revenue Service.

“Today’s decision levels the playing field for taxpayers and government agencies,” Joe Bishop-Henchman, executive vice president of the NTUF, said in a statement. “Unreasonable IRS interpretations will no longer automatically prevail in court, which is appropriate, and reasonable interpretations will continue to have the force of law.”

The Natural Resources Defense Council (NRDC) — the progressive environmental group that lost the Chevron case in 1984 — warned that ending Chevron’s rights would be a recipe for chaos as judges across the country would be forced to interpret unclear laws.

“The Supreme Court has assumed for itself and for lower court judges a decision-making role that the Constitution did not provide for them,” NRDC argued last week. “The Court has stripped many federal agencies charged with protecting public health, public safety, and the environment—including the U.S. Environmental Protection Agency and the U.S. Food and Drug Administration, to name just two—of the authority to interpret the laws they apply. Instead, federal judges can now issue orders.”

Although a majority of the Supreme Court justices have assured that earlier rulings based on Chevron — cited in some 18,000 federal court cases — will not be automatically overturned by their decision, Kagan has doubts about that.

“Most believe that simply ‘relying on Chevron’ is not enough to counter the force old decisions; the challenger will need additional ‘special justification,'” she wrote. “Most are optimistic; I am not so optimistic. Courts motivated to overturn an old Chevron-based decision can always come up with something we’ll call ‘special justification.'”

Kagan predicts that in the coming years, regulations on the environment, health care, finance, transportation, and artificial intelligence will change as a result of court preferences.

“In every area of ​​current or future federal regulation, expect the courts to play a dominant role from now on,” she wrote. “That is not a role that Congress gave them in the (Administrative Procedure Act) or any other statute. It is a role that this Court has now assigned to itself and to other judges.”®