analysis The US Supreme Court has ruled that judges should no longer defer to government agencies' interpretations of vague laws, a decision that could have an impact on some of the biggest lawsuits against tech companies.
This deference is known as Chevron deference and dates back to a 1984 court ruling. Chevron v. Natural Resources Defense Council The EPA can define vague terms in government laws, so long as it seeks to apply the law in the way Congress intended.
Last week, the Supreme Court overturned 40 years of precedent in two cases. Roper Bright Enterprises v. Raimondo and Relentless Corp. v. Department of Commerce – On whether the National Marine Fisheries Service can force U.S. fishing vessels to pay federal observers’ wages in the absence of specific regulations.
“The Administrative Procedure Act requires courts to use their own discretion when determining whether an agency acted within its statutory authority, and courts cannot defer to an agency's interpretation of the law simply because the law is ambiguous. Chevron is overruled,” the justices wrote in a 6-2 majority. [PDF].
The majority today holds monopoly power over all unresolved issues, no matter how technical or policy-based they may be.
In a dissenting opinion joined by Justice Sonia Sotomayor, Justice Elena Kagan said the ruling was a judicial seizure because it gave judges decisions that had previously been left to government agencies and professional officials.
“Today, the majority wields monopoly power at one stroke over every unsettled question of the meaning of regulatory law, even questions of technical expertise and policy,” Kagan wrote. “As if that weren't enough, the majority has made itself the nation's administrative czar.”
Justice Ketanji Jackson Brown recused himself from the Roper decision, likely due to his previous involvement in the appeals court case, but he joined the 6-3 dissent that applied to the Relentless decision.
The ruling could significantly limit the effectiveness of U.S. regulators such as the Federal Trade Commission (FTC) and the Federal Communications Commission (FCC) and change how the technology industry is regulated.
For example, the FTC is battling Adobe over subscriptions and AI giants over antitrust, and the abolition of non-compete agreements, a pillar of Silicon Valley, is also being challenged. With the dismissal of the Chevron case, this latest case may be a test of the new business order.
As for the FCC, many fear that the entire issue of net neutrality could be neutralized if it goes back to the judges. Telecommunications companies don't like the FCC and could challenge any fines or penalties just to get new rules in place.
Follow the money
According to The New York Times, the anglers in the Roper-Bright case were represented by lawyers from Americans for Prosperity, a group funded by petrochemical tycoon Charles Koch, a frequent opponent of regulation.
Patrick McLaughlin, director of policy analysis and senior fellow at George Mason University's Marketas Center, which is chaired and funded by Koch, characterized the court's decision as a positive step from a governance perspective.
“Under Chevron deference, if one agency interprets an ambiguous statute one way and another agency (presumably a regulated entity) interprets it another way, the agency would win in the event of a tie and courts would defer to the agency's presumed expertise,” he said in a post last week. “In a post-Chevron world, without the benefit of agency deference in the event of a tie, regulators would have to justify their interpretation of an ambiguous statute.”
The National Taxpayers Union Foundation (NTUF) welcomed the Supreme Court's decision, noting its potential impact on the Inland Revenue Service.
“Today's decision will level the playing field for taxpayers and government agencies,” NTUF Vice President Joe Bishop Henchman said in a statement. “The IRS's unreasonable interpretations will no longer automatically win in court, as they should, and reasonable interpretations will still have the force of law.”
The Natural Resources Defense Council, a progressive environmental group that lost the 1984 Chevron lawsuit, warned that removing the Chevron consideration would create chaos because judges across the country would be asked to interpret vague laws.
“The Supreme Court has thrust upon itself and lower court judges a policy-making role that the Constitution never envisioned,” NRDC argued last week. “The Court has stripped many federal agencies tasked with protecting public health, public safety, and the environment — such as the U.S. Environmental Protection Agency and the U.S. Food and Drug Administration — of the power to interpret the laws they enforce. Instead, federal judges now have the say.”
While most federal justices have assured that the decision does not automatically invalidate previous decisions based on Chevron – which have been cited in some 18,000 federal cases – Ms. Kagan is skeptical.
“The majority of people agree with the decision.[m]Reliance on Chevron alone Precedent binding“Challengers will need additional 'special justification,'” she wrote. “While the majority is optimistic, I am not. Courts seeking to overturn old Chevron decisions can always come up with something they can label as 'special justification.'”
Kagan predicts that judicial preferences will reshape rules governing the environment, health care, finance, transportation and artificial intelligence in the coming years.
“In all areas of current and future federal regulation, the courts are expected to play a leading role going forward,” she wrote. “That is not a role that Congress has given them. [Administrative Procedure Act] The power of this Court to make laws, or other laws, is a function imposed not only on the other judges but on the Court itself.”
