Chevron Deference May be Gone: What Does That Mean?

With all the news about recent Supreme Court decisions, there is one that isn’t getting as much attention, but which may have a larger effect on you and your business: It’s a case called Loper Enterprises and the case struck down what is known as Chevron deference.

A Primer on US Government

To understand why the case is important, it helps to understand what executive agencies do. We are taught that congress (the legislature), and only Congress, makes laws. But that’s not exactly how the government works.

Sure, congress passes laws, but those laws do not have all the details that are needed to execute the laws, nor for all of us to understand what is required under the law. So, when a law is passed, the executive branches, under the President, “fleshes out” the law, filling in the blanks congress didn’t include, through executive agencies.

The same is true with executive orders, passed by the president. These are often orders where the president will tell executive agencies to formulate and pass laws on certain topics.

A Big Impact

We think congressional laws dominate our lives, but in reality, especially for businesses, it is the rules that are passed by these executive agencies that govern our lives, or businesses, and the way we legally do business.

One recent example is the banning of the use of noncompete agreements. Others are rules on how employees are paid under the Fair Labor Standards Act. How planes are maintained, how long truck drivers are paid, the quality of air, nuclear safety, on the job safety rules passed by OSHA, how food gets from farm to your table safely, how internet providers can charge websites—almost every area of our lives, is affected by these rules passed by executive agencies.

Chevron Deference

Since a 1984 case called Chevron, courts have agreed that these executive agencies’ decisions should be given deference—that is, courts agreed that these agencies, that take public comments, and hold hearings before passing many rules, know more about the topics they are given, than courts do. If a law or rule was challenged, whatever the agencies did or decided, was, essentially, the law. The court didn’t and couldn’t second guess an executive agency.

But the recent Supreme Court case changes all that. Now, it appears that every individual court where an executive agency rule is challenged, will be able to exercise its own individual authority and won’t have to give deference to what an executive agency did or said.

Good and Bad?

The good for some businesses is that this could lead to less regulation and rules, many of which businesses believe hamper their ability to do business.

But the decision could have the other unintended effect of making it hard for businesspeople to know, when these rules are challenged, how a court will rule. This could make it harder to predict what a court will do when a rule is challenged, and thus, could lead to a lot of uncertainty in your daily business dealings.

It also could put you at risk–the same rules that make it harder for some to do business, also have the effect of protecting others. These rules often provide protection to both consumers and businesses.

We can help you with legal issues related to the government and government regulations. Call the West Palm Beach business litigation lawyers at Pike & Lustig today.

Sources:

slate.com/news-and-politics/2024/06/elena-kagan-dissent-supreme-court-john-roberts-chevron-disaster.html

supremecourt.gov/opinions/23pdf/22-451_7m58.pdf