LEGAL

Supreme Court shifts power over federal regulations from agencies to judges

The 6-3 decision to eliminate “Chevron deference” divided the court along ideological lines.

The Supreme Court building is seen.

The Supreme Court on Friday killed off a judicial doctrine that has protected many federal regulations from legal challenges for decades — delivering a major victory for conservatives and business groups seeking to curb the power of the executive branch.

The 6-3 decision divided the court along ideological lines. Its fallout will make it harder for President Joe Biden or any future president to act on a vast array of policy areas, from wiping out student debt and expanding protections for pregnant workers to curbing climate pollution and regulating artificial intelligence.

Known as Chevron deference, the Reagan-era doctrine required judges to defer to agencies’ “reasonable” interpretations of “ambiguous” federal laws. Now, judges will be freer to impose their own readings of the law — giving them broad leeway to upend regulations on health care, the environment, financial regulations, technology and more.

The high court’s about-face comes after more than a decade of campaigning from conservatives — including some of the Republican-appointed justices themselves — looking to rein in the so-called administrative state. And it lands just two years after the justices used a ruling on a climate case to limit regulations that pose “major” implications for politics or the economy.

Chief Justice John Roberts was crystal clear in the majority opinion: “Chevron is overruled.”

“Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the [Administrative Procedure Act] requires,” Roberts continued. “Careful attention to the judgment of the Executive Branch may help inform that inquiry. And when a particular statute delegates authority to an agency consistent with constitutional limits, courts must respect the delegation, while ensuring that the agency acts within it. But courts need not and under the APA may not defer to an agency interpretation of the law simply because a statute is ambiguous.”

Chevron deference has become an “impediment” to judges deciding the law, Roberts added.

Chevron was a judicial invention that required judges to disregard their statutory duties,” he wrote. “And the only way to ‘ensure that the law will not merely change erratically, but will develop in a principled and intelligible fashion’ is for us to leave Chevron behind.”

But the court’s liberal wing warned that the majority’s latest decision will allow unelected judges to strike down rules based on their own policy preferences. Until now, a court had to let the agencies’ interpretations stand as long as they fell within the realm of reasonability, even if the judge didn’t think it was the best reading.

“A rule of judicial humility gives way to a rule of judicial hubris,” Justice Elena Kagan wrote for the dissenting liberal wing.

Kagan — who took the rare step of reading part of her dissent from the bench, a signal of extreme disagreement with the ruling — blasted the majority for overriding agency decisions in recent years that she argued should have been left to agencies, including the 2022 decision restricting EPA’s climate authority over power plants, as well as decisions against Biden administration actions on vaccine mandates and student loan relief.

“But evidently that was, for this Court, all too piecemeal,” Kagan wrote. “In one fell swoop, the majority today gives itself exclusive power over every open issue—no matter how expertise-driven or policy-laden—involving the meaning of regulatory law. As if it did not have enough on its plate, the majority turns itself into the country’s administrative czar.”

Kagan also argued that the court’s decision to cast aside its 40 year old precedent was unjustified and she predicted “large-scale disruption” as the effects of the court’s action ripple through the federal government.

During January’s oral arguments, Justice Elena Kagan cited AI as one arena where courts could be ill-suited to overturn agencies’ expert judgments, among other “countless policy issues that are going to confront this country in the years and decades ahead.”

“Will courts be able to decide these issues as to things they know nothing about?” asked Kagan. “Or are people in agencies going to do that?”

“What actions can be taken to address climate change or other environmental challenges?...What rules are going to constrain the development of A.I.? In every sphere of current or future federal regulation, expect courts from now on to play a commanding role,” Kagan wrote. “It is not a role Congress has given to them….It is a role this Court has now claimed for itself, as well as for other judges.”

Brett Kavanaugh, one of the conservative justices who joined Friday’s ruling, complained in January that doctrine was allowing new administrations to make sharp changes in how agencies interpret laws, resulting in “extreme instability.”

Chevron itself ushers in shocks to the system every four or eight years when a new administration comes in, whether it’s communications law or securities law or competition law or environmental law,” Kavanaugh said at the time.

But the impact of Friday’s ruling will be much more “chaos” in the lower courts, predicted David Doniger, a top attorney at the Natural Resources Defense Council who argued the original Chevron case on behalf of the environmental group in 1984. That case involved a legal battle over a Clean Air Act regulation.

“You’re going to have decisions that turn on the policy preferences of the judge,” which could often align with that of the president who appointed them, Doniger told the POLITICO Energy podcast ahead of the Supreme Court’s ruling.

“Even more than you already do, you’ll have companies or even environmental groups shopping for the best forum, and you’ll have a lot of inconsistent judgments,” he added. “And actually, the Supreme Court would have more work to do — they would have more disagreements among the lower courts to resolve. And in the meantime, everyone from environmentalists to companies would be less certain about what the rules of the road are.”

All of Biden’s recent regulations will be at greater risk in legal challenges, said Rafe Petersen, an attorney with the law firm Holland & Knight.

“Especially things where he’s attempting to regulate greenhouse gases and advancing climate goals. There’s no clear statement in the underlying acts that was the intent of Congress,” said Petersen.

Meanwhile, Republicans cheered the ruling.

“It’s the best news for the nation since they applied the major questions doctrine” against EPA’s climate authority over power plants, Sen. Kevin Cramer (R-N.D.) texted POLITICO.

Senate Minority Leader Mitch McConnell (R-Ky.) said in a statement that Congress had weakened its power through a “willingness to outsource legislative responsibilities” to the executive branch. “The days of federal agencies filling in the legislative blanks are rightly over.”

Democrats and their allies trashed the ruling and cited recent ethics controversies involving some justices.

“As long as industry’s preferred politicians are on the Court, without any real ethics requirements, we can expect decision-making to continue to serve the favored few rather than the best interest of the American people,” said Rep. Raúl Grijalva (D-Ariz.), the House Natural Resources Committee’s top Democrat.

Becky Pringle, president of the National Education Association, said in a statement that the court’s “MAGA supermajority” has “granted themselves blanket authority to rewrite the rules in favor of the billionaires and major corporations — while leaving the American people to pay the price.”

Even before Friday’s ruling, some judges have become increasingly assertive in overturning even long-standing regulatory decisions, showing less deference to agencies’ expertise. One example was last year’s ruling by a GOP-appointed federal judge in Texas — later overturned by higher courts — rejecting the Food and Drug Administration’s decadesold approval of the abortion drug mifepristone.

When the Supreme Court first adopted the Chevron doctrine — almost 40 years ago to the day — it was embraced across the ideological spectrum.

Conservatives applauded the doctrine for reining in what they considered to be activist judges who had been striking down Reagan administration rules. Liberals, meanwhile, praised it for giving more decision-making power to agencies’ policy experts, including on issues where Congress is slow to act.

But conservatives’ thinking about Chevron deference has shifted in the past 15 years. With deadlock on the Hill only getting worse, administrative agencies have more frequently stepped in to fill the void by interpreting old statutes in new ways to issue regulations on climate change, the financial sector, telecommunications and more.

The Chevron doctrine has benefited agencies facing challenges to their regulations, no matter who is president. A 2017 study found that agencies won 77 percent of court cases that were reviewed under Chevron deference. When courts applied a less deferential standard, those victories fell to 38 percent.

Prominent conservative legal thinkers — including Justices Samuel Alito, Clarence Thomas, Neil Gorsuch and Kavanaugh — have argued that the courts were abdicating their power to decide the law.

Although Chevron remained the rule for lower courts, the Supreme Court has shifted in recent years toward a new, much more stringent test for agencies: the so-called major questions doctrine, which the Supreme Court formally defined in a 2022 ruling limiting the Environmental Protection Agency’s authority to regulate greenhouse gases from power plants.

Under that test, any agency action that involves a novel use of power and has “significant” economic or political impacts must have clear authorization from Congress. The justices have never spelled out what sort of regulations count as “significant,” however, and the lower courts are working through that issue case by case. But the Biden administration’s opponents immediately sought to use the 2022 ruling to handcuff the executive branch on a range of policy areas ranging from hot-button issues like abortion and immigration to more parochial rules such as a proposed ban on asbestos and anti-tampering rules for amateur car races.

Friday’s decision could have an even more sprawling cascading impact.

The Supreme Court has repeatedly reined in Chevron over the past decade or so, but until now it had always stopped just short of explicitly overruling it. That irked legal conservatives on and off the high court, and created a broad movement on the right with the goal of burying the precedent altogether.

The ruling comes just one day after the Supreme Court ruled, again 6-3, to limit agencies’ power by requiring civil enforcement seeking penalties to be heard by federal courts and not through administrative processes. Experts say the ruling could have widespread effects on some agencies’ ability to go after violators.

Ben Lefebvre contributed to this report.