This summer, the Supreme Court ended its term shortly after issuing game-changing rulings that modify the authority of federal agencies. Given the result of restraining agencies such as the FTC and FCC from interpreting and enforcing laws, some observers have interpreted these rulings as a gift to the tech industry. It might take time to appreciate the full force of the rulings, but we have already begun to see how key players of our data-driven economy will leverage them.

How did the Court alter the power of federal agencies?

First, on June 27, in Securities and Exchange Commission v. Jarkesy, the Court narrowed the SEC’s ability to seek civil penalties for securities fraud. This opinion is likely to restrict all federal agencies’ enforcement power. Specifically, the Court held that when agencies seek civil penalties against a defendant for violations of common-law offenses (e.g., fraud, eavesdropping, or trespass), the Seventh Amendment entitles the defendant to a jury trial. This changes how the federal government can function in the future: The ruling leaves agencies with diminished enforcement tools.

Find more info on Jarkesy here.

The next day, in Loper Bright Enterprises v. Raimondo and Relentless v. Department of Commerce, the Court struck down a principle that empowered federal agencies to address challenges in the face of outdated rules as well as the absence of laws designed for the Information Age. Nearly as old as the internet itself, the principle known as the Chevron doctrine required courts to defer to federal agencies’ reasonable interpretations of the laws they administer when ambiguities arose. Now, without this deference, courts are free to “decide legal questions by applying their own judgment” even on matters that require specialized knowledge and expertise.

Finally, on July 1, in Corner Post, Inc. v. Board of Governors of the Federal Reserve System, the Court made agency actions more vulnerable indefinitely, by ruling the six-year statute of limitations to challenge final agency action does not begin until an injury has occurred. From now on, a business may challenge an agency action or rule in court when it initially harms the business, regardless of when the rule was adopted.

Find more info on Loper Bright, Relentless, and Corner Post here.

How could these rulings reshape the tech industry?

The Court’s administrative law rulings this term could have a profound effect on agencies and policy matters that shape tech. In the past few weeks alone, developments in three key areas—Net Neutrality, Privacy, and Intellectual Property—have provided hints regarding the magnitude of the potential impact.

• Net neutrality. During each new administration since 2015, the Federal Communications Commission has revised its policies on net neutrality, which determine whether internet service providers can prioritize certain web traffic. The FCC’s latest rules under the Open Internet Order, which reclassifies broadband service providers under the Communications Act of 1934, were set to take effect on July 22. But on July 12, the court issued an administrative stay to give ISPs and the FCC an opportunity to address the implications of Loper Bright. Citing Loper Bright and Relentless in a petition to stay enforcement of the order, the ISPs argued that the courts, not the FCC, should interpret the 90-year-old law and asked the Supreme Court to factor in the FCC’s inconsistent interpretations and application of the law. Then, on August 1, the Court blocked the FCC’s rules from taking effect and noted that ISPs are likely to succeed in challenging the agency’s interpretations. The Court scheduled oral arguments on the issue for late October or early November.
• Privacy. The Federal Trade Commission and the FCC have both made consumer privacy a top enforcement priority in recent years. Administrative law cases in this term have raised questions about the agencies’ authority to address the public’s concerns about the tech industry’s collection and monetization of personal information.

In April 2024, the FTC and Meta agreed to pause proceedings related to the agency’s unilateral reopening of a 2020 privacy order pending the Supreme Court’s administrative law rulings this term. The 2020 privacy order required what was then known as Facebook to pay a $5 billion civil penalty related to allegations that the company had misrepresented users’ privacy controls. On July 18, 2024, Meta supplemented its earlier, numerous constitutional challenges to the FTC’s actions, and cited both Loper Bright and Jarkesy. Meta argued in its further reply that reopening the 2020 order was: (1) unconstitutional, since Jarkesy ostensibly affirms the company’s right to have its day in an Article III court; and (2) inconsistent with the public’s interest, according to the Loper Bright ruling, which stressed the importance of finality in and consistency of agency actions. “The FTC shouldn’t be the prosecutor, judge, and jury in the same case,” a Meta spokesperson said, highlighting fundamental questions about the agency’s authority. If Meta is successful in its challenges, the FTC’s authority on privacy matters new and old, including those under existing consent decrees, will be curtailed.

In April 2024, the FCC made headlines by issuing nearly $200 million in fines to AT&T, Sprint, T-Mobile, and Verizon for illegally sharing customers’ location data. The agency had brought the privacy cases against the wireless carriers under its interpretation of the Communications Act. The FCC asserted that the location data was subject to key restrictions in the law, which prohibited carriers from sharing such data, a position many expect will be challenged based on Loper Bright.

• Intellectual Property. On June 24, in anticipation of the Supreme Court’s ruling on Chevron deference, Google petitioned the Federal Circuit for an en banc hearing, and asked the Court to consider the authority of the US Internal Trade Commission under Section 337 of the Tariff Act of 1930. The ITC investigates allegations that involve imports that violate U.S. intellectual property rights. In recent years, it has become an increasingly popular forum for patent enforcement. The ITC has interpreted Section 337 to authorize it to act on post-importation infringement, and this interpretation was deemed reasonable in Suprema, Inc. v. ITC, 796 F.3d (2015). Google argued that Congress intended the ICT’s authority to be limited to cases in which the accused articles infringe as imported. Should the Federal Circuit grant Google a hearing, the future of this popular forum for patent litigation will be recast.

What about Artificial Intelligence?

In oral arguments for Relentless, Justice Kagan raised critical questions about how discarding Chevron would affect the country’s ability to govern policy-laden, rapidly evolving areas. Her comments focused on artificial intelligence as an example. She asked:

“So let’s imagine Congress enacts an artificial intelligence bill … then, just by the nature of things and especially the nature of the subject, there are going to be all kinds of places where, although there’s not an explicit delegation, Congress has, in effect, left a gap. It has created an ambiguity. And what Congress is thinking is, do we want courts to fill that gap, or do we want an agency to fill that gap?”

Whether an artificial intelligence bill is enacted or not, we can expect a more volatile legal landscape as courts are likely to “fill that gap” by applying a wide range of laws to controversies that relate to burgeoning technology. After this Supreme Court term, judges in various jurisdictions might interpret the same statute in contrasting ways as it relates to AI, or resolve substantially similar AI questions in unique ways by interpreting distinct industry-related laws, which could lead to vastly different policy outcomes.

These administrative law rulings will likely spark significant volatility in the tech industry, and stimulate weighty consequences for consumers, workers, and businesses as we become more reliant on digital goods and services.

To learn more about how the Supreme Court’s admin law cases of this term may play out in U.S. courts, check out this

analysis of the implications in the maritime industry.