In a 6-3 decision today, the U.S. Supreme Court overturned the longstanding “Chevron deference,” which instructs courts to defer to a federal agency’s reasonable interpretation of an ambiguous statute. The majority ruled that courts must instead rely on their independent judgment when deciding whether an agency has acted within its statutory authority.
The 1984 Supreme Court decision Chevron v. Natural Resources Defense Council established a legal test for when courts should consider deferring to federal agencies. However, in their decision for Loper Bright Enterprises v. Raimondo, the majority of justices struck down that test, saying it violated the Administrative Procedure Act. Chevron “requires a court to ignore, not follow, ‘the reading the court would have reached’ had it exercised its independent judgment as required by the APA,” said Chief Justice John Roberts, writing for the majority.
Chevron has been cited in numerous legal cases involving questions of agencies’ statutory authority. The majority ruled that those previous cases still stand. “The holdings of those cases that specific agency actions are lawful… are still subject to statutory stare decisis despite the court’s change in interpretive methodology,” Roberts wrote.
In a statement, American Bankers Association President and CEO Rob Nichols said that while ABA is still reviewing the decision, it sends a “crystal-clear message” to federal agencies that their powers are not unlimited. “This is an important win for accountability and predictability at a time when agencies are unleashing a tsunami of regulation—in many cases clearly exceeding their statutory authority while making it harder for banks to serve their customers,” he said. “We will continue to fight to ensure that bank regulators follow the law every time they exercise their powers.”
