Reversing the Chevron Doctrine: The Impact on Consumer Protection

By Charlene Crowell

(Trice Edney Wire) – The Supreme Court has issued several important decisions in its recent term. One such decision reversed a 40-year-old precedent commonly known as the Chevron Doctrine, which gave federal agencies the authority to create regulations that enforce and implement laws passed by Congress.

But on June 28, a large majority opinion authored by Chief Justice John Roberts ignored judicial precedent to rule that courts alone will decide on regulation. In the SCOTUS majority view, the justices themselves will now decide on highly specialized rules designed to maintain robust consumer safety standards governing our food, public health, workplace safety, clean water, higher education and more, bypassing the high-powered expertise of government officials in affected agencies.

Roberts’ opinion included: “Perhaps most fundamentally, the Chevron presumption is flawed because agencies have no special authority to resolve statutory ambiguities. Courts do. . . Courts must exercise their independent judgment in deciding whether an agency acted within its statutory authority.”

For Black and Latino Americans, this judicially seized power undermines and potentially weakens current agency regulations that were meant to bring us closer to the promises of freedom and justice for all. In two specific areas—fair housing and financial regulation—many hard-fought victories to address inequality could be reviewed and reversed.

In a sharp dissent, Justice Elena Kagen, joined by Justices Sonya Sotomayor and Ketanji Brown-Jackson, outlined the implications of the majority ruling.

“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,” Kagen wrote. “As if it didn’t have enough on its plate, the majority is transforming itself into the country’s administrative czar.… Today’s decision is not Congress’s decision. It is entirely the majority’s choice.”

For example, the Fair Housing Act of 1968 was strengthened by a HUD provision known as Affirmatively Furthering Fair Housing (AFFH). Originally a 2015 Obama administration initiative, an updated version was proposed in 2023 by the Biden administration that HUD says will “achieve integrated living patterns, overcome historic and existing patterns of segregation, reduce racial and ethnic concentrations of poverty, increase access to homeownership, and provide realistic and truly equitable access to community opportunities and resources.”

A key element of this principle was the development of written local “Equality Plans” that would incorporate citizens’ concerns into a meaningful plan of action.

Similarly, the Consumer Financial Protection Bureau (CFPB), established under the Dodd-Frank Wall Street Reform & Consumer Protection Act of 2010, implemented short-term lending regulations in 2017 that require lenders to determine whether consumers have the ability to repay before approving predatory loans such as short-term loans, auto equity loans and certain other high-priced installment loans.

But two years later, a change in administration and agency director led to a court stay of the rule. In response, a coalition of advocates, including the Center for Responsible Lending, wrote to then-CFPB Director Kathleen Kraninger warning that the agency was abandoning its mission to protect consumers.

“(S)ince the change in leadership in 2017, the CFPB has repeatedly failed to support the August 19, 2019, compliance date that the agency set for these important regulations,” the coalition wrote in part. “The payment provisions in the Rule will protect consumers from significant harm by curbing an unfair and abusive practice: repeated attempts by payday loan and vehicle title lenders to debit borrowers’ bank accounts after two consecutive failed payment attempts due to insufficient funds… These protections are important under any circumstances, but even more so because the agency has delayed and is proposing to revoke the ability-to-repay protections.”

With another change of administration in 2020, under current President Joe Biden, the CFPB updated the regulations to cover new predatory loans, such as long-term loans with balloon payments and other consumer loans carrying an annual percentage rate (APR) of 36 percent or higher.

Scientists and supporters of Chevron’s change of heart responded quickly and decisively.

“When I was in law school, most conservative lawyers protested this very creeping rulemaking,” Deborah A. Sivas, a chair professor at Stanford Law School, said in a recent Q&A blog. “Now they’re basically accepting it.”

“In addition to the SAVE repayment plan and student loan forgiveness, this ruling may also impact other Department of Education regulations, including those related to gainful employment,” according to a statement from the National Association of Student Financial Aid Administrators (NASFAA).

“This is a seismic shift,” said Sen. Amy Klobuchar, a member of the House Judiciary Committee. “Congress passes laws, and then federal agencies use their deep knowledge and experience to implement them. By overturning decades of settled law, this extreme Court has given itself the authority to question even the most complex regulatory decisions. This decision will create chaos and undermine our ability to protect the health and safety of all Americans.”