In the final week of this year’s Supreme Court term, the Court issued several decisions that alter the role of federal agencies in the way laws are interpreted and enforced, and thus the way that business will be done in the U.S.
- Loper Bright Enterprises v. Raimondo and Relentless v. Department of Commerce. For more than 40 years under the Chevron doctrine, courts have deferred to an agency’s “permissible” interpretation of an ambiguous statute. On June 28, the Supreme Court issued its decision in the Loper Bright Enterprises and Relentless cases, which overrules the Chevron doctrine, and holds that courts must exercise their independent judgment when interpreting federal statutes.
Impact: Without the restriction of Chevron deference, courts are likely to see an increase in the number of challenges to agency actions, and more success on the part of challengers. In addition, Congress is likely to take this decision into account when it writes statutes, and agencies will refer to this decision when interpreting them. This will probably result in less certainty among companies that seek to comply with the many statutes and regulations that control consumer products.
- Securities and Exchange Commission v. Jarkesy, issued June 27, limits the power of agencies to enforce statutes “in house” when the issue to be decided (the claimed wrongdoing) involves “private rights.” Whenever the issue is similar to those governed by common law (fraud, debt, etc.), and the remedies sought by the agency are punitive or intended to deter conduct rather than to restore the status quo, the Seventh Amendment to the Constitution mandates that the defendant has the right to a trial by jury in federal court. On the other hand, for issues that involve “public rights” (granting of patent rights, settlement of claims against the government, issuance of tariffs, etc.), there is no constitutional right to a trial by jury. Because the allegations against Jarkesy were similar to common law fraud, and because no public rights exception existed, the Court reversed the SEC’s in house imposition of civil fines against an investment advisor and his company.
Impact: Many federal agencies that have in-house enforcement power, including administrative courts, will probably see that power challenged. Again, this may create more uncertainty for businesses, because more established enforcement processes by the EEOC, FDA, CPSC and/or other agencies will be questioned.
- Corner Post v. Board of Governors of the Federal Reserve System, issued June 31, held that any new entrant to a market has six years from the time it is permitted to sue to challenge a regulation. This means that companies that have newly entered a market may challenge existing regulations, regardless of when they were adopted, and even if the same challenge has been made unsuccessfully by a different party.
Impact: This decision is also likely to result in additional disputes over agency regulations, including directives that were previously upheld under Chevron.
