LawBurst: Chevron Doctrine Overturned!
Loper Bright Enterprises v. Raimondo: Supreme Court decisions limit agency authority.
Follow up from my previous post:
Today, the US Supreme Court (in a 6-3 decision along conservative/liberal lines) in Loper Bright Enterprises v. Raimondo has overturned the “Chevron Doctrine” or “Chevron Deference.”
Today, the US Supreme Court (in a 6-3 decision along conservative/liberal lines) in Loper Bright Enterprises v. Raimondo has overturned the “Chevron Doctrine” or “Chevron Deference.” Note, this is the second major ruling this week that reduces agency authority. The Court also ruled this week that the SEC’s use of in-house judges in securities fraud cases was unconstitutional (SEC v. Jarkesy).
Overturning the Chevron Doctrine is a big deal. To put this in perspective, 70 Supreme Court decisions and 17,000 lower court decisions have relied on Chevron. It effectively weakens the power of executive agencies, ending a long-established precedent relied upon since 1984 (Chevron v. Natural Resources Council).
Under the Chevron Doctrine, a court is supposed to defer to an agency’s interpretation of the statute it administers when Congress’s intention of that law is ambiguous or silent -- so long as the agency’s interpretation is “reasonable.” Please see my prior post for more about this legal doctrine.
I. The Ruling
What Does the Ruling Say?
Going forward, the court must decide if an agency has authority to act when a statute is ambiguous without automatically deferring to agencies' interpretations of said laws. Instead, courts will interpret the laws on their own and will only consider the agencies' views if they find them convincing (persuasive and not binding). In other words, the Supreme Court stressed that judges should make their own decisions if the meaning of the law is unclear and not just follow what agencies say.
What Does This Mean for Previously-Ruled Cases?
The ruling does not automatically overturn previous cases decided under the Chevron Doctrine. The Court clarified that it isn’t challenging prior decisions. Nevertheless, people might try to revisit and challenge old cases where the Chevron deference was crucial to the outcome.
What Does This Mean for Open Cases?
For cases that are still open or under appeal, parties may argue for a re-evaluation of agency interpretations using the new standard of “independent judicial interpretation.” This means that courts might reach different conclusions if they interpret the laws differently from the agencies.
What Are the Potential Consequences of Overturning Chevron?
Many may be celebrating the end of Chevron, but with anything, there will likely be many positive and negative effects of this decision:
1. Congress Must Clarify Agency Authority: Instead of agencies creating regulations through enforcement (as you see with crypto from the SEC and the CFTC), they likely now have to wait for Congress to pass new laws to clarify what authority they actually do have. Why? Because these agencies would need explicit permission from Congress.
2. Increase in Lawsuits Against Agencies: We will likely see more legal battles against agencies. There could be a surge of lawsuits, making it chaotic as every unclear term in a law could be subject to litigation, complicating governance.
3. Agencies Defanged: If Congress is stuck in partisan gridlock, it might mean no new laws are passed, leaving agencies with less power. That Congress will act to clarify agency authority assumes a lot.
4. Agency Hesitancy: Agencies may also become more cautious in issuing guidance and making rules given they will have less authority.
5. Power Shifts & Patchwork of Regs: This decision could shift power to the courts, leading to varied interpretations of regulations across different regions. You may see forum shopping (where you sue in certain states that you know to be favorable to your views).

II. Final Thoughts
Once again, the present Supreme Court has proven a lack of deference for “stare decisis” (the legal concept that the law honors prior rulings, opinions and precedents from previous case law) — prior terms saw reversals on abortion and affirmative action.
What Does It Mean for Crypto?
For those thrilled about the ruling, this is not a complete panacea to SEC/CFTC overreach via regulation by enforcement. The Howey Test (the test that determines if a certain transaction is an “investment contract” and thereby a security) is judge made law. So overturning Chevron doesn’t overturn the Howey Test. The impact in reality would more likely arise in SEC rulemaking.
While the decision may curb some regulatory overreach, it also introduces uncertainty and potential chaos as the courts, Congress, and regulatory agencies adjust to this new legal landscape. The need for clear and comprehensive legislative action is more pressing than ever to establish well-defined regulatory frameworks that support the nascent crypto sector.
Images:
Image of Tug of War generated by Dall-E, Firefly, DreamStudio and Pixlr
Image of Judge Gensler generated by Dall-E, Firefly, DreamStudio and Pixlr
Disclaimer: This post is for general information purposes only. It does not constitute legal advice. This post reflects the current opinions of the author(s). The opinions reflected herein are subject to change without being updated.