Finance

Expect Big Business Impacts If Chevron Deference Falls To Conservative Supreme Court

Many businesses would welcome the opportunity to test the boundaries of a newly weakened administrative state.

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series-1694404_1280Most people have not heard of the case Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. Even among those of us who went to law school, it’s mostly remembered as something we had to learn about once for a law school exam decades ago.

Make no mistake though: Whatever industry you work in, Chevron probably affects you on a day-to-day basis whether you realize it or not.

The federal government provides some sort of regulatory oversight to all kinds of private industries in the U.S. From motor vehicle manufacturing to oil and gas extraction to pharmaceutical making, business must be conducted according to a framework of federal regulations.

While government regulation is routinely demonized for political purposes — no one exactly loves some higher authority coming in to impose a bunch of rules on them in their chosen profession — it is necessary. Generally, within reason, regulatory oversight is good for society. Thanks to federal regulation, our rivers no longer routinely catch fire, for instance.

But your congresspeople aren’t actually out there themselves kicking tires and making sure there’s not formaldehyde in the milk. Congress passes legislation (well, it used to be able to pass legislation). After that, though, carrying things out is in the hands of hundreds of federal agencies.

That is where Chevron comes in. Much like the incomplete dinosaur DNA in Jurassic Park, whenever Congress passes legislation, it’s full of holes. Instead of filling these gaps with frog DNA a la everyone’s favorite dinosaur film franchise, the legislative holes get filled by the appropriate government administrative agency.

Congress isn’t necessarily doing a bad job when it passes massive regulatory schemes that later need agency interpretation. Many such pieces of legislation are already hundreds, or even thousands, of pages long. It’s just that real life is complicated, industries are increasingly complex, and it’s impossible to anticipate how laws should be applied in every situation which might come up.

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So, the administrative agencies must interpret statutes themselves. What the Chevron case says is that when a given statute is silent or ambiguous regarding an issue, the administrative agency charged with administering that statute may issue its interpretation, and then the courts will defer to that agency’s interpretation as long as it is reasonable or rational.

This might not sound like as big of a deal as it is. Yet, the concept of judicial deference has many, many real-world implications. For judges reviewing an agency action, Chevron deference essentially allows them to say, “Well, I might not have interpreted the statute this way, but nothing prohibits the agency’s interpretation, so we have to go with that.”

The big criticism of Chevron deference is that it places too much power in the hands of federal agencies, which do not have to directly face voters at election time. Although there’s some validity to that, it’s also true that Congress has been pretty dysfunctional for a long time now. The agencies tasked with administering the laws Congress passes probably have more applicable expertise to fill in the gaps than generalist (and increasingly politically polarized) judges after-the-fact.

On May 1, the U.S. Supreme Court announced that it will be hearing a case challenging Chevron. Chevron has stood as binding precedent since 1984.

Of course, no one knows for sure how the nation’s highest court will rule in the case. However, as we recently saw when Roe v. Wade was overturned, the current iteration of the Supreme Court does not have as much respect for long-standing precedent as some of the justices testified it would in their confirmation hearings. Furthermore, the Supreme Court’s six-justice conservative majority has shown itself to be somewhat hostile to agency authority.

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Chevron deference means that regulated businesses face an uphill battle when challenging administrative decisions. Its demise would put the regulators and the regulated on a more equal footing in court — superficially appealing to some businesses, no doubt, but also a severe abrogation of how sweeping laws have been implemented for approximately the last 40 years.

If Chevron does fall, expect a wave of litigation against regulators. Many businesses would welcome the opportunity to test the boundaries of a newly weakened administrative state. Whose interests that would ultimately serve remains an open, and troublesome, question.

Jonathan Wolf is a civil litigator and author of Your Debt-Free JD (affiliate link). He has taught legal writing, written for a wide variety of publications, and made it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at jon_wolf@hotmail.com.

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