In tossing out a 40-year-old doctrine for interpreting federal regulations, the U.S. Supreme Court has radically rewritten the rules for business planning and expansion, empowering challenges to the government if it gets in the way, say experts.
In Loper Bright Enterprises v. Raimondo, the court last week eliminated the legal deference that agencies have been getting when they translate a general, vague or confusing law into regulatory guidelines for supervising business.
“The … decision is one of the most significant Supreme Court decisions in several decades,” said Wyatt Kendall, a law partner at Atlanta-based Morris, Manning & Martin. “At its heart, the Loper Bright decision fundamentally shifts the balance of power within the federal government.”
The previous guidance, known as the Chevron Doctrine, was established in 1984. At the time, Anne Gorsuch was head of the Environmental Protection Agency arguing that the agency’s interpretation of the law should receive deference and the court agreed. This time, her son Neil was among the six-justice majority taking the view that the government did not deserve that.
Credit: hshin@ajc.com
Credit: hshin@ajc.com
Experts say the Supreme Court’s ruling does not immediately cast aside any of the rules that have governed American business, the workplace and more for generations. But it is represents a potent shift of power away from the many federal agencies that report to the president while carrying out Congressionally endorsed law.
“Chevron deference… had been a cornerstone of administrative law and at the heart of federal agency rulemaking for four decades,” said Kendall. “The Supreme Court opted to overrule it entirely and, in turn, flipped administrative law on its head.”
Without Chevron, the courts will have predominance on how to administer the law, a fundamental change that will likely open the door to a vast array of legal challenges. A number of business interests argued the federal bureaucracy had too much power under the Chevron Doctrine.
Congress has given federal agencies runway to supervise the cars Americans drive, the planes they fly, the food they eat, the medicines they take, the hospitals they go to for treatment, the way they treat women athletes, trading of the stocks they buy, the financial institutions they do business with and the rules of their workplaces.
Unless Congress becomes much more detailed in its lawmaking, challenges to rules will multiply, Kendall said.
Yet it’s not a complete triumph for business, said Ken Nahigian, co-founder of the Balancing Act Project, a pro-business advocacy group.
Credit: Miguel Martinez
Credit: Miguel Martinez
Now, certainty about the rules will depend on legislation, he said. “This cuts both ways for businesses. Yes, it empowers them to challenge in federal court, but unless Congress changes its ways, it will be very expensive and could really paralyze companies.”
Adding to the impact of killing the Chevron Doctrine, the court on Monday decided, in a separate case, that companies should have more time to challenge regulations. By the same 6-3 vote, the court ruled that the six-year deadline to file a lawsuit was pegged, not to when the regulation was issued, but when it affected a company filing the suit.
Together, the rulings set the stage for a spate of legal challenges by leaders of companies who feel constrained by federal oversight — the operations or plans of many thousands of Georgia companies bump up against federal regulations.
Most Atlanta-area businesses contacted by The Atlanta Journal-Constitution, including several of the largest companies based in Georgia, declined to comment. But business groups historically have lobbied for less stringent regulation.
The “U.S. Supreme Court decision overturning the Chevron doctrine validates our efforts and will help ensure that courts remain the final arbiters of the law,” said a statement from the Metro Atlanta Chamber. “We were pleased to see this ruling.”
The group in 2021 lobbied successfully at the state Legislature to reduce the level of deference accorded to the Georgia Department of Revenue’s interpretations of ambiguous laws, said Marshall Guest, senior vice president at the chamber.
Companies know it costs money to abide by regulations, said Scott Segal, a partner at the Houston-based Bracewell law firm, which represents energy companies. “Particularly in heavily regulated industries like energy, the burden imposed by government pronouncements is a big part of effective business planning.”
Now, companies will be more aggressive during the rule-making process, to “put regulators on notice that their interpretation of their authority will not go unchallenged,” he said.
Environmental regulations are likely to be the first targets of businesses and pro-business forces, said Adam Orford, an assistant professor at the University of Georgia’s School of Law.
Most environmental laws leave lots of room for agency interpretation — with much of that wiggle room created intentionally because pollution issues are so complex, he said.
“There is a great deal of technical expertise required to decide what is the right standard for (environmental) protection,” Orford said.
Among the regulatory spheres experts consider most vulnerable are those aimed at reining in greenhouse gas emissions from human activity.
With global temperatures rising at an alarming rate, the EPA has recently finalized new limits on emissions from power plants, cars and more. Those regulations are rooted in the Clean Air Act, which was enacted more than five decades ago, primarily to clean up hazardous air pollution that was choking U.S. cities.
That 1970 law took effect long before human-caused climate change was the urgent threat it is today and does not specifically mention greenhouse gases — which means the EPA has been interpreting how to execute the law.
The Supreme Court decision will spark a flurry of legal challenges, said Kym Meyer, litigation director for the Southern Environmental Law Center.
“The court didn’t really establish a new test — It just got rid of the old test,” she said. “And so I think the most immediate, near-term issue is really the chaos that you’re going to have.”
