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Special Edition: The End of an Era: Supreme Court Strikes Down Chevron

7/9/2024

For this special edition of Take a Second: CU Legal Insights with me, MCUL General Counsel Haleigh Krombeen, we are going to breakdown the Supreme Court’s ruling striking down Chevron. Due to the timing of this decision, I am pushing the promised discussion on trends in class action lawsuits to the next edition, so make sure you come back and check it out!   

Please note: This article is intended for general information only and does not constitute legal advice. If you have any questions about how to implement this rule and/or the possible implications, you should contact your attorney for advice.  

The Supreme Court’s recent decision in the Loper Bright Enterprises v. Raimondo case ended a 40-year precedent known as “Chevron deference.” In short, this means that the courts no longer will be deferring to federal agencies’ interpretations of ambiguous statutes that the agencies administer even if their interpretations of the ambiguous statutes were reasonable. The prior decision recognized the expertise of agencies in their specialized fields and aimed to promote consistency and predictability in regulatory enforcement.  

What is “Chevron deference”? 

Chevron deference, prior to the recent ruling, was the latitude provided by federal judges to agencies over how to interpret the statutes federal agencies administer when a dispute arises. To put it simply, Chevron allowed federal agencies to make reasonable interpretations of federal statutes that were ambiguous. If the statutes were not ambiguous then this deference was not extended. With this ruling, this is no longer the case. 

Who does this decision affect?  

Everyone. But more specifically federal agencies who, until now, have enjoyed the ability to interpret ambiguous laws. With the “striking down” of this doctrine that has been around for some 4 decades, there are going to ripple effects felt through all sectors. This opinion is not likely to jeopardize the probability that regulations promulgated by agencies will be held up by the courts. However, it is more likely that regulations will be challenged either directly in an action against the agency under the Administrative Procedures Act (APA) or collaterally in a private lawsuit against a defendant whose defense is that they relied on and complied with an agency regulation. It doesn’t mean that federal agencies will not continue to take part in rulemaking, it just means that if those rulemakings are challenged, the court does not have to defer to the agencies’ expertise but rather the judges themselves can make the determination of what was to be the statutory intent.  

What’s next? 

Likely a lot of legal challenges. It remains to be seen how this will impact the regulatory and legislative landscape moving forward. Will Congress be clearer in their statutory language? Will regulatory agencies carry out less rulemaking? We will have to wait and see. However, the impacts on the legislative and regulatory process are sure to be lasting.  

To sum it up, this ruling marks a significant shift in the balance of power between federal agencies and the judiciary, with far-reaching implications for regulatory practice and governance. We will have to wait and see how this impacts federal agencies going forward.  

Hope to see you next time when we “take a second” to talk about trends in class action lawsuits in the financial services industry. 

This article is intended for general information only and does not constitute legal advice.  



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