Supreme Court Shocks Nation: Major Blow to Administrative State

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The Supreme Court has overturned the ‘Chevron Deference,’ delivering a significant blow to the ‘administrative state.’ The decision will reshape the way that federal agencies interpret laws and craft rules that regulate a wide range of businesses.

The “Chevron deference” originated from a 1984 case involving Chevron, a large oil company. The case centered on the Environmental Protection Agency’s interpretation of the Clean Air Act, which Chevron argued was too broad. Chevron lost the case, and a judge ruled that federal agencies should be considered the authority on a statute if it’s ambiguous. This ruling established the Chevron doctrine, also known as the Chevron deference.

According to the Chevron deference, courts should defer to a federal agency’s interpretation of ambiguous statutory language within the agency’s own enabling legislation. This deference recognizes federal agencies’ expertise and policymaking role, allowing them to fill in gaps and interpret complex statutes within their purview.

In a 6-3 decision along ideological lines, the court’s conservative majority dismantled the 40-year-old administrative law. This decision is a major victory for conservative and anti-regulatory interests aiming to dismantle the ‘administrative state.’ The Biden administration defended the precedent before the court.Conservatives and Republican policymakers have long criticized the doctrine, arguing it contributed to the dramatic growth of government and gave unelected regulators too much power to make policy beyond congressional intent.

In recent years, the Supreme Court has increasingly questioned the authority of regulatory agencies. “Chevron is overruled,” the justices wrote in the majority opinion. “Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority,” adding that “careful attention to the judgment of the executive branch may help inform that inquiry.”

Business groups, including the Chamber of Commerce, had long hoped for a scaling back of Chevron. Instead, they achieved a complete victory. The Chamber, which has opposed recent regulations such as the Federal Trade Commission’s noncompete ban, argued that Chevron gave federal agencies too much leeway in rulemaking.

Some legal analysts argue that overturning Chevron could create uncertainty for existing federal rules. “That can create uncertainty for consumers and businesses alike because where does that leave the state of law when, for so long, everyone’s been operating under this understanding that what the regulatory agencies rule are, effectively, the rules that we should be following,” says Chris Roberts, an attorney at Butsch Roberts & Associates.

For example, the Department of Labor’s recent expansion of the overtime pay rule, currently challenged in court, was initially defended under Chevron deference. However, the Labor Department has since moved away from that argument.

Scaling back Chevron could also reduce agency rulemaking, a change many businesses would welcome. Senator Dick Durbin (D-Illinois) criticized the decision, saying the Supreme Court’s “conservative majority just shamelessly gutted longstanding precedent in a move that will embolden judicial activism and undermine important regulations.”

Jeff Holmstead, a former assistant administrator at the EPA under George W. Bush, believes that overturning Chevron will change how federal agencies make rules. He expects that, over time, agencies will become more cautious in issuing regulations.

Mark Joseph Stern wrote on X: “Today’s ruling is a massive blow to the ‘administrative state,’ the collection of federal agencies that enforce laws involving the environment, food and drug safety, workers’ rights, education, civil liberties, energy policy—the list is nearly endless.”

He believes the Supreme Court’s reversal of Chevron constitutes a major transfer of power from the executive branch to the judiciary, stripping federal agencies of significant discretion to interpret and enforce ambiguous regulations.

In writing the court’s opinion, Chief Justice Roberts argued that Chevron “defies the command of” the Administrative Procedure Act (APA), which governs federal administrative agencies. He stated that the APA requires a court to ignore, not follow, the reading the court would have reached had it exercised its independent judgment as required by the APA. Roberts believes it is “misguided” because “agencies have no special competence in resolving statutory ambiguities. Courts do.”

In dissent, Justice Kagan criticized the conservative supermajority, saying it “disdains restraint and grasps for power,” making “a laughingstock” of stare decisis and causing “large-scale disruption” throughout the government.

Stern concludes: “Hard to overstate the impact of this seismic shift.” Simply put, it is a massive win for the Constitution. The decision comes one day after the Supreme Court curtailed federal agencies’ use of administrative law judges, delivering another blow to the administrative state.