07/10/24

Last month, the US Supreme Court reversed a 40-year-old decision that granted federal agencies broad regulatory power, limiting their authority to issue regulations unless Congress has explicitly authorized them. This ruling, stemming from a pair of related cases, is a significant victory for the business community, which has long sought to reign in federal regulators abuse of their statutory authority. Critics of the Chevron doctrine argue that it grants unelected federal bureaucrats excessive power in crafting regulations impacting major areas of American life, including the workplace, environment, and healthcare.

"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 wrote for the court. He described the earlier decision as a "judicial invention that required judges to disregard their statutory duties." Previously, the framework required courts to defer to an agency's reasonable interpretation of laws passed by Congress. Calls for overturning this doctrine came not only from conservative legal scholars but also from some justices who argued that courts were abdicating their responsibility to interpret the law.

This ruling will likely have a significant impact on the dozens of pending legal challenges filed by the banking industry. We have long argued federal banking regulators are abusing their statutory authority and this ruling will allow judges to better reign in rouge regulators.