Regulation
Supreme Court rules to strike down Chevron doctrine, limiting power of federal agencies
The U.S. Supreme Court ruled 6-3 Friday to sharply limit the authority of federal regulators, overturning a 40-year-old legal precedent that gave regulatory agencies leeway in interpreting the laws they enforce.
The 1984 case Chevron v. National Resources Defense Council established that courts should defer to regulators’ decisions and expertise when statutory language is ambiguous, essentially giving federal regulators the power to enforce their interpretations of the law.
Since the original decision was issued, “Chevron deference” has allowed regulators to take action on urgent issues while waiting for Congress to pass new laws. The rationale behind the decision was that agencies are more likely to have the knowledge and expertise to interpret the laws they enforce than courts.
In his majority opinion On Friday, Chief Justice John Roberts called the Chevron doctrine “unworkable,” adding that it “allows agencies to change course even when Congress has not given them the authority to do so. By its sheer breadth, Chevron fosters unwarranted instability in the law, leaving those who attempt to plan agency action in an eternal fog of uncertainty.”
“Chevron’s decision is overturned,” Roberts concluded. “Courts must exercise their independent judgment in deciding whether an agency acted within its statutory authority, because [Administrative Procedure Act] requires. Particular attention to the judgment of the executive branch can help to inform this investigation. And when a particular law delegates powers to an agency consistent with constitutional limits, courts must respect the delegation, while ensuring that the agency acts within it. But courts are not obligated and, under the APA, cannot defer to an agency’s interpretation of the law simply because a law is ambiguous.
The case has long been a target for conservative activists, who argue that deference to Chevron 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 all areas of current or future federal regulation, expect the courts to now play a dominant role. This is not a role that Congress gave them, in the APA or any other statute. It is a role that this Court now claims for itself, as well as for other judges.
“Given Chevron’s ubiquity, the decision to do so is likely to produce large-scale disruption. Today’s decision rests solely on the majority’s belief that Chevron was wrong – that it gave too much power to the agencies and not enough to the courts,” Kagen added. “But evolving views about the value of regulatory actors and their work do not justify overhauling a cornerstone of administrative law. In this sense also, today’s majority has lost sight of its true role. »
Chevron’s reversal could have immediate implications for federal regulators, including the U.S. Securities and Exchange Commission (SEC), which under Gary Gensler has pursued an aggressive and expansive enforcement program amid a near vacuum of legal and regulatory clarity for the cryptocurrency industry. The SEC has filed lawsuits against a number of cryptocurrency companies, claiming they violated federal securities laws by offering cryptocurrency buying and trading services that the regulator considers unregistered securities.
These cryptocurrency companies, which include Coinbase, Ripple, Binance and Kraken, among others, have stated in their various defenses that the digital assets in question are not securities and that the SEC is exceeding its authority by alleging that the assets do not meet these requirements.