Regulation
The Supreme Court decides to overturn the Chevron doctrine, curbing the power of federal agencies
The U.S. Supreme Court on Friday issued a 6-3 ruling that dramatically limited the authority of federal regulators, overturning a 40-year-old legal precedent that gave regulatory agencies latitude in interpreting the laws they were charged with enforcing.
The 1984 case, Chevron v. National Resources Defense Council, established that courts should defer to the decisions and jurisdiction of regulators when the language of statutes is ambiguous, essentially giving federal regulators the authority to enforce their interpretations of the law.
Since the original ruling, the so-called “Chevron deference” has allowed regulators to act on urgent matters while they wait for Congress to pass new laws. The rationale behind the decision was that agencies are more likely than courts to have the knowledge and expertise to interpret the laws they enforce.
In his majority opinion On Friday, Chief Justice John Roberts called the Chevron Doctrine “unenforceable,” adding that it “allows agencies to change course even when Congress has given them no power to do so. By its broadness, the Chevron Doctrine promotes unwarranted instability in the law, leaving those who attempt to plan agency action in an eternal fog of uncertainty.”
“Chevron is nullified,” Roberts concluded. “Courts must exercise their independent judgment in deciding whether an agency acted within its statutory authority, as the [Administrative Procedure Act] requires. Careful attention to the judgment of the executive branch can help inform that inquiry. And when a particular statute delegates authority to an agency consistent with constitutional limits, courts must respect the delegation while ensuring that the agency is acting within it. But courts must not and, under the APA, cannot defer to an agency’s interpretation of the law simply because a statute is ambiguous.”
The case has long been a target of conservative activists, who argue that Chevron’s deference gives too much power to unelected federal regulators and fails to hold Congress accountable for writing clearer laws.
Associate Justice Elena Kagen dissented, writing, “In every sphere of current or future federal regulation, expect the courts to play a leadership role from now on. It is not a role that Congress gave them, in the APA or in any other statute. It is a role that this Court has now claimed for itself, as well as for other judges.”
“Given Chevron’s pervasiveness, the decision to do so is likely to be a major disruption. All that underpins today’s decision is the majority’s belief that Chevron was wrong, that it gave agencies too much power and courts not enough,” Kagen added. “But changing one’s mind about the value of regulatory actors and their work does not justify revising a cornerstone of administrative law. In that sense, too, today’s majority has lost sight of its proper role.”
Chevron’s turnaround could have an immediate impact on federal regulators, including the U.S. Securities and Exchange Commission (SEC) which, under the leadership of Chairman Gary Gensler, has pursued an aggressive and expansive enforcement program in the near-vacuum of Legal and regulatory clarity for the cryptocurrency industry. The SEC has filed a lawsuit against a number of cryptocurrency companies, saying they violated federal securities laws by offering cryptocurrency buying and trading services that the regulator deems to be unregistered securities.
These cryptocurrency companies, including Coinbase, Ripple, Binance, and Kraken, among others, have argued in their various defenses that the digital assets in question are not securities and that the SEC is overstepping its authority by arguing that the assets meet those requirements.