Supreme Court Rules to Overturn the Chevron Doctrine, Curbing Federal Agencies’ Power

As a researcher with a background in law and experience following regulatory developments, I am deeply concerned about the Supreme Court’s decision to overturn the Chevron doctrine. This legal precedent has long provided regulatory agencies, including the Securities and Exchange Commission (SEC), with the authority to interpret ambiguous laws and take necessary enforcement actions while waiting for Congress to pass clearer legislation.

In a 6-3 decision handed down on Friday, the United States Supreme Court significantly limited the power of federal regulatory bodies, overruling a longstanding principle established four decades ago that allowed these agencies some flexibility in interpreting and applying the laws they administer.

In the landmark 1984 case, Chevron v. National Resources Defense Council, it was determined that courts should grant significant deference to regulatory agencies’ interpretations of ambiguous statutory language. Effectively, this ruling empowers federal regulators to implement and enforce their own understanding of the law.

After the initial judgment was issued, the “Chevron deference” has given regulatory bodies the authority to act promptly on pressing matters, pending Congressional legislation. The reasoning behind this decision lies in the fact that agencies possess a greater depth of knowledge and expertise when it comes to interpreting the laws they implement than courts typically do.

In his ruling issued on a Friday, Chief Justice John Roberts expressed his concern over the Chevron doctrine, referring to it as “unworkable.” He pointed out that this legal principle permits agencies to alter their positions despite lacking the necessary authority from Congress. Consequently, the vast scope of Chevron engenders unnecessary instability in the law, leaving individuals and organizations who must navigate agency actions perpetually uncertain about the applicable regulations.

In my analysis, Chevron’s decision was overturned. The role of courts is to make independent judgments when assessing if an administrative agency has acted within its legislative authority, as mandated by the Administrative Procedure Act. While taking into account the Executive Branch’s perspective can be informative, it does not mean that courts should blindly defer to an agency’s interpretation of the law just because a statute is ambiguous. Instead, they must respect the delegation of authority while ensuring the agency stays within its bounds.

Too much power

Conservatives have criticized the Chevron deference for quite some time, contending that it grants excessive authority to unappointed federal administrators at the expense of elected lawmakers, who should be responsible for penning clearer legislations.

“From now on, courts will take the lead in every area of federal regulation regarding cryptocurrencies and future technologies. This isn’t a power granted to them by Congress through the Administrative Procedure Act or any other legislation. Instead, the Supreme Court and lower courts are assuming this role for themselves.”

Due to Chevron’s extensive influence, making such a decision is likely to cause significant disruption on a grand scale. The justification for this move is primarily the majority’s conviction that Chevron was misguided – providing too much power to regulatory agencies and insufficient authority to courts. However, evolving perspectives regarding the value of regulatory bodies and their functions do not warrant upending a fundamental tenet of administrative law. In essence, the majority has strayed from its proper role in this context.

SEC tackles crypto

Reversing Chevron’s doctrine might promptly influence the functions of federal regulatory bodies, such as the Securities and Exchange Commission (SEC), led by Chairman Gary Gensler. With scant legal and regulatory framework for the crypto sector, the SEC has initiated vigorous enforcement actions against several crypto firms. The SEC alleges these companies have infringed upon federal securities laws by providing purchase and trading platforms for cryptocurrencies that the commission deems as unregistered securities.

Coinbase, Ripple, Binance, Kraken, and other crypto companies argue that the digital assets they deal with should not be classified as securities. They claim that the Securities and Exchange Commission (SEC) is exceeding its jurisdiction by asserting that these assets fit the definition of a security.

Yesterday, the Supreme Court handed down a ruling that restricts the Securities and Exchange Commission (SEC) from utilizing in-house administrative judges for resolving civil fraud cases. The six justices in the majority opinion asserted that these types of proceedings infringe upon the constitutional guarantee of a jury trial.