The U.S. Supreme Court on June 28 announced a ruling that overturns a 40-year-old precedent and limits the authority of regulatory agencies to effectively write their own laws.
In a 6-3 ruling, the court’s majority opinion in the case of Loper Bright Enterprises v. Raimondo undoes the 1984 decision in the case of Chevron U.S.A. v. Natural Resources Defense Council. That prior decision established what became known as the Chevron deference, a legal doctrine that essentially gave regulatory agencies leeway in how they interpreted statutory language to create regulations. The thinking was that courts should defer to regulatory agencies, which usually have specialized knowledge of their area, to interpret statutes when the intent of Congress was ambiguous and where the interpretation was reasonable. However, in practice that often led to significant changes in how agencies defined and enforced regulations whenever a new presidential administration took office. Further, regulatory agencies frequently put forward regulations for issues that would otherwise have been under the scope of Congress, such as recent efforts by the Department of Labor to expand the pool of workers that qualify for overtime pay.
Because of this, business groups and trade associations have long opposed the Chevron deference. In overturning the doctrine, the Supreme Court agreed with businesses that Chevron allowed agencies to exceed their authority and that it violated the Administrative Procedure Act (APA), the law that governs how administrative agencies propose and establish regulations. Instead of deferring to the agencies, the Supreme Court held that the APA requires courts to exercise independent judgment in deciding whether an agency has acted within its statutory authority.
“This decision reaffirms the importance of checks and balances within our government,” said Eric Hoplin, president and CEO of the National Association of Wholesaler-Distributors. “It ensures that agencies do not exceed their intended authority and that courts take a more active role in interpreting laws. This decision brings much-needed clarity and fairness to the regulatory process, benefiting businesses and the economy as a whole.”
The U.S. Chamber echoed NAW’s sentiments, saying the decision would help create a more predictable and stable regulatory environment. “The Supreme Court’s previous deference rule allowed each new presidential administration to advance their political agendas through flip-flopping regulations and not provide consistent rules of the road for businesses to navigate, plan and invest in the future,” U.S. Chamber President and CEO Suzanne Clark said. “The Chamber will continue to urge courts to faithfully interpret statutes that govern federal agencies and to ensure federal agencies act in a reasonable and lawful manner."