Supreme Court’s Repeal of Chevron Doctrine Will Undermine Corporate Accountability

Last week in a case called Loper Bright Enterprises v. Raimondo, The U.S. Supreme Court has struck down the so-called Chevron Doctrine, reversing a 40-year-old precedent that gave federal agencies a degree of latitude to interpret vague regulations in their areas of expertise. Governments must balance the benefits of allowing companies to innovate and grow with the need to enforce rules that protect vital public interests. The Chevron deference rule, cited as an authority in more than 7,000 federal cases, was based on a sound insight—namely, that for agencies to be effective in regulating corporate behavior, they must be able to set reasonable rules even when Congress has not provided clear guidance. After Chevron, and especially if Donald Trump is elected this year, we can expect fewer environmental protections, reduced food safety requirements, and looser standards for approving new drugs.

The Chevron Doctrine has been a target of business interests for decades, from energy to pharmaceuticals. While government regulations that reduce carbon emissions or improve consumer health and safety are good for society, they often lead to higher business costs and lower corporate profits. A big reason so many corporate leaders support Donald Trump and help fund his campaign is that they share his determination to curtail regulatory power. Three conservative Supreme Court justices appointed by Trump have formed a supermajority on the Supreme Court that favors limiting the government’s role in enforcing corporate accountability.

The tension between government oversight in the public interest and corporate profit has existed for more than a century. In 1906, Upton Sinclair published The Jungle, a novel that exposed the grossly unsanitary conditions in Chicago meatpacking plants. Sinclair’s statement prompted Congress to pass the Meat Inspection Act to regulate food production, among other progressive laws.

In 1911, a fire at the Triangle Shirtwaist Factory in New York City claimed the lives of 146 garment workers, one of the worst industrial accidents in U.S. history. As a result, the factory owners were found liable for wrongful death in a civil lawsuit. The disaster helped to spark a series of state and federal labor laws to improve workplace safety.

In 1934, in the wake of the stock market crash of 1929 and the Great Depression, Congress established the Securities and Exchange Commission to enforce regulations against market manipulation and provide greater oversight of the financial sector.

In 1962, environmental activist Rachel Carson published Silent Spring, a book documenting the health hazards of the pesticide DDT. Her warning led to a government ban on its use. She also helped found the Environmental Defense Fund. Within years, EDF and other environmental organizations helped build public support for the creation of the Environmental Protection Agency in 1970.

Which brings us back to Chevron v. Natural Resources Defense Council. In that 1984 case, NRDC, another leading environmental group, sought to clarify the scope of the EPA’s authority to interpret and apply the Clean Air Act. A unanimous Supreme Court established a two-step process, ruling that government agencies must follow any clear legislative statements when applying the act, but that courts should generally defer to agency interpretations of ambiguously worded provisions if the interpretation is reasonable. In Loper Bright Enterprises, the court undermined this pragmatic balance between the powers of the executive and the judiciary.

The majority opinion in Loper Bright, written by Chief Justice John Roberts, concluded that Chevron must be overturned because it “was found to be fundamentally flawed.” He argued that “courts must exercise their independent judgment in deciding whether an agency acted within its statutory authority,” concluding that “Chevron It doesn’t prevent judges from making policy. It prevents them from judging.”

In her dissenting opinion, Justice Elena Kagen responded that the Chevron doctrine “has become part of the warp and weft of modern government, supporting all manner of regulatory activities — keeping air and water clean, food and medicine safe, and financial markets fair, to name a few.” She warned that “today’s majority decision will send a massive shockwave through the legal system, casting a shadow over many established statutory constructs and threatening the interests of many litigants who have relied on them for years.”

Looking to the future, federal agencies now face three questions. The first and most important is how far courts will now go in limiting agency discretion. As reported in The Washington Post Immediately after the Supreme Court decision, “corporate lobbyists began plotting to use the favorable ruling in a ramped-up push to curtail regulation of climate, finance, health, labor and technology.” Fasting predicted that the decision “will set off years of litigation that could redefine the role of the U.S. government in the lives of modern Americans.”

Second, there is the question of whether the decision will force more precise lawmaking. Supporters of the Supreme Court’s decision, such as Thomas Berry of the Cato Institute, argue that “the court’s opinion in Loper Light not place any restrictions on Congress’s ability to clearly delegate policy choices to the executive branch.” But current divisions in Congress, caused in part by the growing power of the far-right House Freedom Caucus, have prevented Congress from acting on a wide range of important issues. In this political environment, the prospects for Congress to act positively to increase the authority of federal regulatory agencies seem extremely low.

The third question is whether litigants will find new and creative ways to pursue legal claims that provide a forum for public interest defenders to enforce corporate accountability. In one seminal case, a Florida jury awarded family members of victims of paramilitary violence in Colombia $38 million to be paid by Chiquita Brands, a food company, for its role in financing the paramilitary group that committed abuses.

As regulators, courts, Congress and companies weigh in on these issues, it’s already clear that striking down the Chevron doctrine will be one of the most significant Supreme Court decisions of the past decade. And it’s hard to imagine a scenario in which it will lead to a regulatory order that serves the broader public interest.