Pollution curbs and competition bans threatened by Chevron ruling

The Supreme Court’s decision to limit administrative agencies’ ability to interpret ambiguous regulations casts a long shadow over federal limits on vehicle emissions, bans on noncompete agreements and efforts to regulate broadband internet.

Friday’s 6:3 ruling invalidating the so-called The Chevron Doctrine could have the greatest impact on environmental, technology and health policy, where partisan gridlock has hampered congressional lawmaking, forcing federal agencies to use old statutes to regulate newer issues like climate change.

At issue is a doctrine established in 1984 when the Supreme Court held in Chevron USA v. Natural Resources Defense Council that when the law is ambiguous, judges should defer to the federal body applying the law if such interpretation is reasonable.

On Friday, the Supreme Court majority ruled in favor of such discretion. no longer applies.

“Courts cannot be guided by the agency’s interpretation of the law just because the statute is ambiguous,” said the President of the Supreme Court John Roberts he wrote.

In a separate opinion, Justice Elena Kagan said the ruling “flips the script” so that courts — not agencies — “will now exercise authority when Congress leaves room for interpretation,” with implications for regulating climate change, health care and the financial system. “Expect courts to take the lead in every area of current or future federal regulation.”

The consequences could be severe for federal agencies and executive branch regulations.

“Chevron’s compliance has allowed more liberal administrations to leverage existing regulations to better protect public health or the environment,” he said David Donigerattorney for the Natural Resources Defense Council Action Fund, who argued the case that established the rule. The court ruling could make agencies “a little more cautious” in creating new regulations, he said before the decision.

Read more: Supreme Court strikes down Chevron rule, blow to agency’s power

This ruling may also make it easier for the Republican Party’s presidential candidate, Donald Trumpto undo Biden-era policies if he wins the November election.

“The Trump administration can come in and say, ‘This is not consistent with the Supreme Court’s ruling,'” he said Kathleen Sgamma, president of the Western Energy Alliance. “I think it will be faster to create phase-out regulations.”

The court said previous rulings based on the Chevron framework remain intact. These shares are legal and “continue to be subject to statutory determinations despite our change in interpretation methodology,” Roberts wrote.

Still, current and future regulations that are not supported by clear, explicit guidance from Congress may face new challenges following the court’s decision. Here are some of them:

Automatic pollution limits

Vehicle pollution standards that effectively force automakers to sell electric vehicles may be vulnerable. Environmental Protection Agency set limits under the Clean Air Act, which Congress last reauthorized long before Tesla Inc.The first models have rolled off the assembly line. Oil and corn groups are already challenging the rule in court, arguing that it relies on a compliance program that averages limits across fleets of vehicles, rather than setting levels that cars and trucks must meet individually. “That comes from a point of silence in the law,” he said Michael Buschbachera partner at Boyden Gray PLLC representing some of the rule’s opponents.

Power plant emissions

The Biden administration’s recent executive order to limit greenhouse gas emissions from power plants has already prompted lawsuits from coal advocates, utility groups and rural electric cooperatives. The administration finalized the measure in April to help protect it from congressional repeal, but former EPA Administrator Andrew Wheeler, now a partner at Holland and Hart LLPhe said it would be wise to wait. “It will potentially undermine everything they are trying to do,” he said before the ruling.

Net neutrality

The Federal Communications Commission this year, activities aimed at making broadband services offered by companies such as AT&T Inc., Verizon Communications Inc. AND Comcast Company. under regulatory oversight using the 1934 communications law. The decline in deference to Chevron puts this agency’s interpretation at risk. Bloomberg Intelligence report on impact of change on business predicts that the probability of the order being blocked or overturned by the court is 80%.

Approvals for ‘Breakthrough’ Drugs

The Food and Drug Administration’s ability to authorize devices or drugs to market more quickly by designating technologies as “breakthrough” could also be at risk. Since 1992, about 300 drug applications have been given expedited review, according to the BI report. The FDA said it has the authority to do so under the federal Food, Drug and Cosmetic Act, which was enacted in 1938. As of December 2023, FDA divisions have granted 933 breakthrough device designations.

“We will see a flood of litigation against FDA decisions,” he said. Chad Landmonan FDA attorney at Axinn, Veltrop & Harkrider LLP. “The big question is: Are the courts going to step outside the curtain and evaluate the science behind these decisions, or are they going to continue to rely on the agency’s science?”

Prohibition of non-competition agreement

This Federal Trade CommissionThe April vote to pass a near-total ban on noncompete laws that prevent workers from changing jobs in an industry could be challenged because of the legal authority it invokes—the authority to issue unfair competition regulations. The Chamber of Commerce and other businesses say the FTC has no authority to create rules that affect such a large segment of the population. The FTC estimates that noncompetes affect about one in five workers.

Internet Privacy Policy

The FTC is in the early stages of drafting rules that would prohibit companies from engaging in “harmful commercial surveillance and negligent data security,” a potentially sweeping effort to regulate data privacy rather than Congress. The FTC has said it has the authority to make the rule under a 1914 statute that allows the commission to create regulations that define business practices that are “unfair or deceptive.” Tech industry groups have argued that such rulemaking could amount to an abuse of power by the government. Once the final rules are released, it is likely that tech companies or industry groups would sue the FTC, alleging that it did not follow proper procedures in promulgating the rules, he said. Berina Szokilawyer at the tech-funded think tank TechFreedom. “It could happen sooner than people think,” Szoka said.

Independent Contractor Policy

The Labor Department’s efforts to strengthen workers’ rights under the Biden administration include reducing the number of people classified as independent contractors, who are not protected by the same laws as employees. The rule was enacted under the Fair Labor Standards Act, but companies and independent contractors are challenging it, arguing that Congress did not authorize the department to issue regulations defining the relationship. “Most of the rules, regulations, decisions and doctrines that employment lawyers deal with on a daily basis are developed primarily by agencies,” said Alexander MacDonald, a partner at the employment law firm Little Mendelson PCwhere he is a member of the Workplace Policy Institute.

To contact the reporters who wrote about this story:
Jennifer A. Dlouhy in Washington at [email protected];
Emilia Birnbaum in Washington at [email protected]

To contact the editors responsible for this story:
Elizabeth Wasserman at [email protected];
Joe Ryan at [email protected]

Simar Khanna, Christine Buurma