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What the downfall of Chevron deference would mean for economic regulations 

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June 11, 2024

What the downfall of Chevron deference would mean for economic regulations

The future of the administrative state hangs in the balance. Supreme Court justices will soon decide in a pair of cases whether to reverse a decades-old precedent known as the Chevron deference that would curb federal agencies’ power to regulate everything from Wall Street to the stove in your kitchen. This Washington Examiner series will look at how a departure from this precedent could rip up the regulation nation. Part 1 focused on the underlying court case. Part 2 explores the possible economic repercussions.

by Zachary Halaschak
WashingtonExaminer.com

The Supreme Court appears poised to scrap or revise a longstanding ruling that relates to how agencies interpret ambiguous statutes, with major implications for regulations that touch many aspects of commerce.

A decision to undo the 40-year-old precedent known as the Chevron deference, or the Chevron doctrine, will have repercussions in the business world, affecting rulemaking in areas as varied as finance, healthcare, and technology.

The so-called Chevron doctrine came as a result of Chevron v. Natural Resources Defense Council, a 1984 Supreme Court ruling that courts should defer to federal agencies’ reasonable interpretations of ambiguous statutes.

SUPREME COURT MAY SOON UNDERCUT BIDEN’S REGULATORY REGIME

Many business and industry groups say the doctrine has led to repressive regulations that are bad for business. But the federal government contends that the precedent respects courts’ authority to interpret law while also upholding the legislature’s ability to delegate power to agencies in the executive branch.

Industry groups and corporations complain that the Chevron deference makes it too easy for new presidential administrations, Republican or Democratic, to change or reverse their interpretation of federal law.

The expected reversal or limiting of Chevron could usher in a wave of litigation as corporations and groups challenge rules that have long been on the books.

The cases in question that led to the legal challenge to overturn Chevron began with fishermen upset with an interpretation of the Magnuson-Stevens Fishery Conservation and Management Act.

Essentially, the lawsuits were brought by a group challenging a National Marine Fisheries Service mandate that compels some fishing companies to pay and house at-sea herring monitors. The companies contend that Congress never authorized the NMFS to require commercial fishermen to pay for at-sea monitors.

“So, basically, having the regulated pay for the regulators,” Karen Harned, chief legal officer at the conservative Job Creators Network, said. “And from their point of view is been a great case for really showing what the problems are with the Chevron doctrine.”

Marc Wheat, general counsel for Advancing American Freedom, said a reversal of the Chevron deference would be “one of the most important decisions probably in our lifetime.”

Wheat said that as of now, federal agencies can be aggressive about pushing the edge of any kind of understanding of what a statute means in the hope that the courts will just go along “kind of mindlessly applying” the Chevron doctrine.

“This really cuts across all industries — it’s every agency,” Wheat said.

The Center for American Progress, a liberal group, listed some specific economic regulations that could be at risk if the Supreme Court reverses the precedent.

The Consumer Financial Protection Bureau under the Biden administration last year proposed a rule to limit credit card late fees to $8 and added guidance to stop banks from charging what the Center for American Progress terms “junk fees” for basic customer service. Those CFPB protections could be vulnerable to being overturned if Chevron is eliminated, the group contends.

Some argue that rulemaking from the Occupational Safety and Health Administration and the National Labor Relations Board could also be at risk given their reliance on the Chevron deference.

For instance, a Texas federal court recently used the Chevron deference to uphold the Labor Department’s ability to impose minimum salary requirements for employers to get exemptions from disbursing overtime to workers classified as “executive, administrative, or professional” employees.

“If Chevron did not apply, businesses would see a greater administrative burden by being forced to conduct a duties test for each employee to determine their eligibility for overtime,” CAP claimed.

But conservatives generally will be pleased to see Chevron go, arguing that its demise will bring about curbs on economic regulations that they view as overreaching.

“Chevron has done a lot of violence to our constitutional order,” Wheat said. “Once Chevron goes away, we will see a lot of overreaching regulations fall by the wayside, and I think that will show up in economic performance numbers.”

Devin Watkins, an attorney at the libertarian Competitive Enterprise Institute, told the Washington Examiner that several big businesses and big industries have a great deal of influence on what federal agencies do. However, smaller businesses, like family-owned ones, have little sway.

“So I think it would likely … move a lot of the economic policy away from benefiting big businesses, which is usually the view of agencies, toward more smaller businesses and individuals that don’t have the ability to impact the agencies,” Watkins said of a decision limiting Chevron deference.

O.H. Skinner, executive director at the conservative Alliance for Consumers, said Chevron being reversed would be a boon for consumers because it “fundamentally alters what these agencies get away with.” He said the government has been using it to make sweeping changes.

As an example, Skinner cited the Biden administration’s efforts to use efficiency standards to promote electric vehicles and discourage the use of fossil fuels.

“They are changing the standards for refrigerators, stoves, water heaters, dishwashers, clothes washers, dryers — every single item, they are kind of massively reinterpreting regulations and rules in an effort to wipe away things they wish people didn’t buy,” Skinner said. “Every time they are doing that, they are taking an existing statute or an existing rule and they are just totally reinventing it.”

Joel Zinberg, senior fellow at the Competitive Enterprise Institute, said if Chevron is significantly weakened or overturned, there might be a flurry of litigation looking to challenge regulations. That would allow the court to take a look at rule interpretations that had previously been upheld under the doctrine.

In the longer term, Zinberg said, a ruling to undo Chevron could lead to more regulatory certainty because it would mean that rules did not change when presidents entered office.

“The Reagan administration’s view of the EPA was very different than the Obama or Biden administration’s view of the EPA,” he said.

Zinberg also said that in the long term, Congress may end up writing statutes in a more responsible manner, meaning lawmakers would get much more specific about what they want a statute to say or do, leaving less up to administrative discretion.

http://www.washingtonexaminer.com/policy/finance-and-economy/3036280/what-downfall-chevron-deference-mean-economic-regulations/

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