In Washington – ACMA Insider – July 11, 2024

Supreme Court Changes the Standard for Regulatory Legal Challenges

In a major shift, the U.S. Supreme Court on June 28 reversed prior precedent that deferred to agencies implementing vague aspects of regulatory law. While a significant shift in legal theory, the decision does not remove the principle of deference to agencies to implement regulations, but rather limits it. 

In a pair of cases consolidated into one ruling, the majority wrote, “Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the APA [Administrative Procedure Act] requires.”  

This undoes the prior standard under a 1984 case, Chevron v. NRDC which created a two-step process for courts to use when evaluating regulatory actions that generally deferred to agency expertise. The first step was to see if the legislation directly spoke to the precise question. If not, the second test was to see if the agency’s decision while implementing the legislation was “reasonable.”  

ACMA’s legal counsel Sidley has prepared a briefing of the decision, which can be read here. Sidley notes the Supreme Court held that Chevron deference is incompatible with the APA and with courts’ paramount duty to interpret the laws that Congress enacts. However, agencies may continue to interpret and implement regulations when directed to do so by legislation itself.  

This decision will likely result in fewer shifts in regulatory shifts between administrations of different parties. As Sidley wrote, under the old Chevron test, broad statutes are often susceptible to multiple reasonable interpretations, statutes frequently changed meaning from administration to administration, and creative agencies were rarely stumped in their search for a broad statutory grant that would support specific policy or political objectives. 

ACMA will host a webinar in August on this topic. More information will come soon. Please contact Dan Neumann with any questions.