Jeopardy

How the Supreme Court’s blockbuster ‘Chevron’ ruling puts countless regulations in jeopardy

By Tierney Sneed, Jeanne Sahadi, Tami Luhby, Brian Fung, Ella Nilsen, Jen Christensen and Katie Lobosco

A major Supreme Court ruling Friday that shifted power from the executive branch to the judiciary stands to transform how the federal government works.

By overturning a 1984 precedent, the court’s conservative majority has made countless regulations vulnerable to legal challenge. The types of executive branch moves that the ruling jeopardizes include a plan to put Wi-Fi on school buses, a new ban on noncompete clauses, health care coverage rules being implemented through Obamacare, and the latest plan to forgive student loan debt.

The Supreme Court ruling could boost efforts by conservatives who have taken aim at the Biden Environmental Protection Agency’s rules limiting planet-warming pollution from vehicles, oil and gas wells and pipelines, and power plants.

“There is no substantive area that this doctrine does not touch,” said Kent Barnett, a University of Georgia School of Law professor who specializes in administrative law.

The so-called Chevron doctrine — named after the case, Chevron v. Natural Resources Defense Council — told courts to defer to an agency’s interpretation of a statute in circumstances in which the law in question is vaguely written. The precedent is deeply entrenched in administrative law, with Republican and Democratic administrations alike using it to shield regulatory action from legal attack.

“Essentially, anytime where an agency has a dispute with either an individual or some other entity — sometimes even the federal government versus the state government — Chevron deference could come up,” said Thomas Berry, a legal fellow at the Cato Institute.

Chief Justice John Roberts wrote the opinion overruling the precedent, writing for an ideologically split 6-3 court that “Courts must exercise their independent judgement in deciding whether an agency has acted within its statutory authority.”

The Roberts court has been chipping away at the precedent over the years. But in the case before the justices this term — two lawsuits challenging regulations requiring that fishermen pay environmental monitors they are required to carry on their boats — the high court dealt the final blow.

The ruling has injected legal uncertainty into regulations of all types, including those on technology, labor, the environment and health care.

There are so many highly complex scientific policy decisions that it would be nearly impossible for Congress to draft legislation with enough detail to account for every regulatory scenario, legal scholars argue.

Roberts said the new opinion should not be used to upend previous cases upholding regulations absent a “special justification.”

But Justice Elena Kagan, in a dissent joined by the court’s two other liberals, questioned whether that threshold would really constrain the ruling’s reach, given the possibility of new lawsuits against regulations that went unchallenged because of the protections of Chevron, as well as the ability of lower courts to find a “special justification” in almost any circumstance.

For now, opponents of regulations are constrained by a six-year statute of limitation for challenging executive branch actions under the relevant law. But the Supreme Court has yet to decide a case heard this term that might gut that limitation. That decision is expected Monday.

Here is a partial look at what could be affected by the new ruling:

Consumer safeguards

Agencies charged with consumer protection, such as the Consumer Financial Protection Bureau and the Federal Trade Commission, often face opposition from financial service firms and other private-sector companies, which may claim that new rules constrain their ability to compete or cost them too much.

Think of issues like what shows up on your credit report, what fees banks and other consumer service providers can charge, how lenders make credit decisions, and rules governing the protection of consumers from scams and fraud. Lawsuits that block those regulations could be costly for consumers, advocates say.

Adam Rust, director of financial services at the Consumer Federation of America, pointed to a recent ruling in Texas in which a federal court paused CFPB’s new rule limiting credit card late fees.

“Every day that rule remains stayed, consumers pay $27 million in late fees that they otherwise would not have had to pay if the rule were in place,” Rust said.

Giving power to the judicial branch to interpret how agencies can apply consumer laws when there are statutory ambiguities will hurt consumers and “rubber-stamp” the political aims of “activist judges,” Rust said, adding that it will also limit the ability of consumer advocates to weigh in on regulatory policy.

“I can’t get a meeting with the Supreme Court, but I can get a meeting with the CFPB,” Rust said, referring to public comments solicited by the agency while regulations are crafted. “I don’t think many in the public are up to writing an amicus brief.”

Proposed employer rules and employee rights may be more constrained

Overtime pay, benefits, workplace retirement plans, the minimum wage, independent contractors and employee rights to unionize are just some of the critical workplace issues for which guardrails set by agencies charged with enforcing workplace laws may be contested more vociferously than they already are now.

The decision may immediately affect a hot-button rule issued this year by the Federal Trade Commission banning noncompete clauses in employer contracts, a regulation the agency says could benefit 1 in 5 US workers but is being challenged by business groups.

“The noncompete case is among the most vulnerable, along with many Securities and Exchange Commission cases,” said Andrew Schwartzman, senior counselor at the Benton Institute for Broadband & Society.

When it comes to regulatory agencies like the Department of Labor, the National Labor Relations Board and the Equal Employment Opportunity Commission, they will no longer be given an automatic advantage when a case is brought challenging how they chose to interpret a law.

“What this decision changes is that the agency no longer gets a boost when it comes into court. If a case was like a race, the agency often started a few legs ahead. Today it starts at the same line as the challenger,” said Alexander MacDonald, a partner and member of the Workplace Policy Institute at Littler, a law firm representing employers.

“Nothing about today’s decision means the agency loses. It just means the challenger has an equal opportunity to put forth its interpretation of the law,” MacDonald added.

When it comes to supporting and upholding worker rights and protections, the ruling on its face may not signal that courts would necessarily disadvantage federal agencies, said Sharon Block, a Harvard Law School professor and executive director of its Center for Labor and a Just Economy.

But practically speaking, if a court or particular judge is hostile to a given issue, that may tip the scales against them.

“The ruling says courts may be informed by the agency’s interpretation. That also means they may not. It’s up to them,” Block said. “The least democratic part of the government will determine what kind of protections the American people have … that Congress has entrusted to agencies.”

With this ruling, she said, the Supreme Court, has sent “an engraved invitation to aggressive challenges to anything these agencies do.”

Potential weakening of patient and consumer health care protections

Friday’s ruling could open the door to legal challenges to the decisions made by the government’s public health agencies, with the American Cancer Society and other health associations warning in a friend-of-the-court brief that the reversal of Chevron could unleash a “litigation tsunami,” even on long-settled policy.

The US Food and Drug Administration and the US Department of Health and Human Services (through its Centers for Medicare and Medicaid Services) rely heavily on the flexibility that the Chevron deference provides to manage a highly detailed and sometimes unavoidably complex regulatory process.

On Medicaid alone, the law is what one federal judge famously described as “almost unintelligible to the uninitiated.”

The laws created to allow these health agencies the authority to regulate the country’s complex health sector were written in a purposely ambiguous way, legal scholars say. Ambiguity was necessary to give the agencies the flexibility to use their technical and scientific expertise to make the countless real-world policy decisions that make up the regulatory foundation of programs that directly affect the health of nearly every American.

The multitude of Health and Human Services Department regulations that govern the Affordable Care Act exchanges, Medicaid, Medicare, insurance coverage and more could now be more easily challenged in court.

Several regulations — including those involving the Affordable Care Act’s federal premium tax credits, annual out-of-pocket limits, the adequacy of in-network doctor options and preventive health services at no cost to patients — could be subject to litigation by those seeking to challenge the agency’s interpretations of the congressional statutes, according to KFF, a nonprofit health policy research and polling organization.

In addition, challengers could have more chances of success in lawsuits against HHS regulations issued by the Biden administration that ban health care providers and insurers from discriminating based on gender identity and sexual orientation and that interpret the Health Insurance Portability and Accountability Act, known as HIPAA, as prohibiting the disclosure of information on reproductive health care, including abortions, said Andrew Twinamatsiko, a director at the O’Neill Institute for National and Global Health Law at Georgetown University.

“It really moves away from the understanding that we have a robust scientific community that protects our health,” Twinamatsiko said. “We’ll have everybody coming in and second-guessing what these agencies are doing, and thereby creating this chaos and also a lack of trust in the system.”

Other programs that could be in jeopardy include the FDA’s Fast Track approval process, with which the agency has sole discretion over which drugs or devices qualify for expedited approval.

Some scholars say the FDA approval process as a whole could also be undermined by Chevron’s reversal. Drugs and devices are approved by the FDA based on evidence that companies submit from what the law calls “adequate and well-controlled” investigations. However, the definition of such an investigation is left up to FDA interpretation.

Challenges to tech regulations, such as new net neutrality rules

The end of Chevron could complicate the US government’s efforts to regulate data brokers, social media platforms, generative artificial intelligence, cryptocurrency and more as agencies scramble to interpret their congressional mandates to fit those new challenges.

Shifting regulatory power from agencies to the courts gives well-resourced companies with armies of lawyers even more power to fend off regulations they view as harmful.

“Congress rarely gets anything done on tech, so agencies do most of the regulatory work,” said Paul Gallant, a policy analyst at the market research firm TD Cowen. “But if the court reduces their rulemaking power, it would be particularly helpful in protecting the major tech platforms against new regulations that currently appear likely if Biden is reelected.”

In the telecom sector, Chevron has been a major reason the Federal Communications Commission is recognized as having the power to regulate — and deregulate — internet service providers (ISPs). Using that authority, the agency voted in April to restore net neutrality rules for ISPs, prohibiting them from blocking or slowing down websites, a move that instantly triggered industry lawsuits.

Major questions doctrine is the next big regulatory legal fight

In some ways, the court’s decision overturning Chevron simply makes official what has already been the reality in practice, other legal experts say.

“For quite some time, Chevron has been a dead letter for several reasons,” said David Vladeck, a Georgetown University law professor and former director of the FTC’s consumer protection bureau. “By and large, Chevron is no longer cited, let alone relied on, in lower courts.”

Faced with a hostile Supreme Court, the EPA has relied on Chevron less and less in recent years. Still, the end of the precedent takes another tool out of the agency’s legal toolbox.

For instance, the Supreme Court in 2014 cited Chevron to uphold a version of the EPA’s so-called good-neighbor rule, which addresses the problem of air pollution that travels across state lines. The Supreme Court put the latest iteration of the regulation on hold last week after a lower court — in a decision that did not cite Chevron — said the new pollution rules could be implemented.

Overturning Chevron could also theoretically hamstring a future Republican administration trying to implement its own rules.

Chevron’s reversal “doesn’t eliminate agency authority; it shifts the burden of how you interpret a statute,” said Ann Carlson, the former acting administrator of the National Highway Traffic Safety Administration and an environmental law professor at the University of California, Los Angeles.

In her view, the major questions doctrine — which says agencies can’t regulate things of “major” economic or political significance if Congress hasn’t given them explicit authority to do so — is what to watch.

Major questions, if used often and effectively to attack the EPA and other agencies, could render them useless because it argues they cannot operate without Congress passing laws explicitly giving them approval to do things, Carlson and other environmental law experts said.

Given extreme political polarization, things often move at a glacial pace in Congress.

Whether the Supreme Court is overturning Chevron or reviving major questions, David Doniger, a senior federal strategist at the Natural Resources Defense Council, told CNN, “their goal is enfeebling the federal government.”