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SCOTUS Limits Agency Power with Ruling on Chevron Deference
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The Supreme Court significantly curtailed the power of federal agencies to interpret ambiguous laws in a landmark ruling on June 21, 2024, effectively weakening the “Chevron deference” doctrine. This decision, in Relentless, Inc. v. consumer Financial Protection Bureau, impacts how courts review agency regulations and is expected to lead to increased litigation challenging agency actions. The 6-3 ruling, with Chief Justice Roberts writing for the majority, signals a broader trend of the Court reining in administrative authority.
What is Chevron Deference?
Chevron deference is a legal principle established in the 1984 case Chevron U.S.A., Inc. v. Natural Resources Defense council, Inc., 467 U.S. 837,which instructs courts to defer to a federal agency’s reasonable interpretation of an ambiguous statute that Congress delegated authority over.
This meant that if a law passed by Congress was unclear on a specific issue, and the agency charged with enforcing that law offered a reasonable interpretation, courts would generally uphold the agency’s interpretation, even if the court might have reached a different conclusion on its own. The doctrine was intended to respect the expertise of agencies and promote consistent regulatory implementation.
Example: In Chevron itself,the Environmental Protection Agency (EPA) defined “stationary source” under the Clean Air Act to include multi-facility complexes. The Court deferred to the EPA’s interpretation, even though it differed from the environmental groups’ preferred reading, because Congress hadn’t explicitly defined the term and had delegated authority to the EPA to regulate air pollution. You can review the original Chevron ruling here.
How Did the June 21, 2024 Ruling change things?
The Supreme Court did not entirely overturn Chevron, but it significantly narrowed its request by adopting a new framework for judicial review of agency interpretations. The Court held that agencies are not entitled to deference when the question at hand is ”major questions” - those of vast economic and political significance.
Under the new framework, courts will now apply a stricter standard of review to agency interpretations of statutes, requiring a clear congressional authorization for agency action, especially in cases involving significant economic or political consequences.This means agencies will need to point to specific statutory language explicitly granting them the authority to act on a major question.
Evidence: The Court’s decision in Relentless, Inc. v. CFPB, 598 U.S. ___ (2024) specifically addressed the funding structure of the Consumer Financial Protection Bureau (CFPB), finding its autonomous funding unconstitutional. The full opinion is available here. The ruling effectively requires agencies to demonstrate explicit congressional authorization for actions with ample economic impact.
What are the Potential Consequences of the Ruling?
The narrowing of Chevron deference is expected to lead to increased litigation challenging agency regulations, as opponents will be more likely to argue that agencies have overstepped their authority. This could result in greater uncertainty for businesses and individuals subject to agency rules.
Moreover, the ruling could shift more power from administrative agencies to the courts, as judges will be more actively involved in interpreting ambiguous statutes. Some legal scholars predict a significant increase in the number of cases reaching the Supreme Court as lower courts grapple with the new framework.
Statistic: According to a report by the American enterprise Institute, agencies successfully defended approximately 70% of their regulations challenged in court when Chevron deference applied. This success rate is expected to decline significantly under the new framework. The AEI report can be found here.
What is the Reaction to the Ruling?
The ruling has drawn strong reactions from both sides of the political spectrum. Supporters of the decision argue that it will restore accountability and limit the power of the administrative state. Opponents contend that it will undermine the ability of agencies to protect public health, safety, and the surroundings.
The Biden administration expressed disappointment with the ruling, stating that it would “hamstring” federal agencies. Business groups, on the other hand, largely praised the decision as a victory for regulatory certainty.
Official Statement: The White House released a statement on June 21, 2024, criticizing the ruling and vowing to defend the authority of federal agencies. The statement is available here.