Supreme Court Ends ‘Chevron Deference’, Increasing Challenges to Regulations

On Friday, the Supreme Court overturned a 1984 decision “commonly known as Chevron, which required lower courts to defer to federal agencies when laws passed by Congress were not entirely clear,” AP News reported.

As The New York Times explains, the Chevron decision “ruled that when Congress passes a law that lacks specifics, courts must give wide leeway to decisions made by federal agencies charged with implementing the law. The theory was that scientists, economists and other specialists in the agencies had more experience than judges in setting rules, and that the executive branch was also more accountable to voters.”

The 6-3 ruling will put the justices in a position to decide those issues, rather than deferring their judgment to federal regulators. While that ruling has been a cornerstone of upholding federal regulation for the past 40 years, business groups have argued that it gives too much power to the executive branch.

“Courts must exercise their independent discretion in deciding whether an agency acted within its statutory authority,” Chief Justice John Roberts wrote on behalf of the court.

First, let’s look at the case:

“Forty years ago, the Supreme Court ruled 6-0, with three justices dissenting, that judges should play a limited, compliant role in reviewing the actions of agency experts in a case brought by environmental groups challenging the Reagan administration’s efforts to ease regulations on power plants and factories,” the AP reported. The 1984 case, Chevron v. Natural Resources Defense Council, “requires courts to defer to agencies’ rational interpretations of ambiguous statutes,” The Wall Street Journal explained.

“Judges are not experts in their field and are not part of either branch of political power,” Justice John Paul Stevens wrote in 1984, explaining why they should play a limited role.

Since then, the Supreme Court has issued 70 rulings citing Chevron, and lower courts have issued 17,000 rulings, according to The Journal.

On Friday, the justices ruled in a current case involving Atlantic herring fishermen who are suing over a rule that requires herring fishermen to pay government observers to track their catches of fish. In striking down Chevron, the justices said courts can issue independent rulings to determine whether a government agency acted within its authority.

Here’s how this could impact businesses:

The decision makes it easier for anyone to challenge federal regulations and win. NACS has ongoing cases challenging federal and state vehicle technology mandates, as well as newly invented regulatory interpretations of labor laws. All of these challenges have a brighter future after the Supreme Court decision.

“One way NACS has consistently advocated for the industry is through the courts,” said Doug Kantor, NACS general counsel. “Getting judges to more carefully consider whether federal regulations actually align with congressional intent should benefit our legal defense. We look forward to the courts applying this new ruling to issues that are a priority for the industry.”