Supreme Court Scales Back Federal Agency Powers

Securities Enforcement Defense attorney Allison Kernisky was interviewed by Corporate Compliance Insights about the U.S. Supreme Court's decision overturning the Chevron doctrine. Federal agencies had long used Chevron deference, established in the 1984 case Chevron v. Natural Resources Defense Council, to defend rulemaking decisions when challenged in court. The ruling came a day after the court found the U.S. Securities and Exchange Commission's (SEC) use of administrative law judges for certain enforcement actions unconstitutional, creating uncertainty for regulators moving forward. Ms. Kernisky commented that corporate compliance and government professionals will likely view the Chevron outcome as positive because of the new ability to challenge regulations deemed overly onerous.

"Many burdensome regulations are likely to be challenged and may be invalidated or interpreted by courts in new ways that may favor business, potentially easing the enforcement of existing regulations and calming the number of new regulations," she said. "While the Supreme Court's ruling will not immediately change anything, over time it could change everything, including the ability of federal agencies to perform their basic functions, such as enforcing their own regulations. The large shift that has occurred over the last several years towards the federal government mandating compliance in every arena, be it ESG, DEI or otherwise could be over or at least significantly curtailed."

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Holland & Knight announced the formation of its Chevron Deference Working Team in advance of the U.S. Supreme Court's June 28, 2024, Loper decision, which overturned the Chevron deference doctrine and will lead to a period of regulatory changes and potential legal challenges for some time.