WASHINGTON —
Part of that is because the decision — which combined two similar cases, Loper Bright Enterprises v. Raimondo and Relentless Inc. v. Raimondo — made a point of not invalidating prior rulings made based on Chevron deference because of that deference alone, said Karen Solomon, senior of counsel at Covington & Burling and former official with the Office of the Comptroller of the Currency.
"Loper Bright expressly does not overrule prior cases decided under the Chevron framework," Solomon said. "The immediate effect of the
Lower courts are now expected to perform their own statutory interpretation to review the work of agencies. However, Solomon says the Supreme Court has still allowed for some reliance on agencies' judgment by preserving the use of Skidmore deference — which allows courts to weigh agency interpretations without those interpretations being binding.
"If the agency supports its regulation by carefully explaining the facts that led it to regulate in a particular way, the court could accept that explanation as a reason to uphold the agency's regulation," she said. "[However,] the court doesn't have to do that — it could find that the statute requires something more or different than the agency has put forward and overturn the agency's regulation on that basis."
That doesn't mean there won't be ripple effects. Solomon says one impact will be that banks will feel they have more leeway to challenge agency rules and regulators will need to put more thought into their regulations in anticipation of such challenges. That could mean already lengthy regulatory timetables required by the
"The agencies will need to prepare detailed, carefully reasoned records of their decision making so that their conclusions will be persuasive under the Skidmore standard," she said. "Interagency negotiations could be even more protracted than they are now, and individual agencies may add layers of internal review to their decision making in an effort to protect against reversal of their decisions in court."
Ian Katz, managing director of Capital Alpha Partners, says the end of Chevron is more likely to shape future rules than undo existing ones, because it leaves cases already settled under Chevron intact. And while he argues courts will likely err on the side of agency expertise to an extent, the banking industry will likely feel more emboldened to challenge regulatory interpretations they balk at.
"Regulated companies, knowing they have the judicial winds at their back post-Chevron, will have a bargaining chip when discussing potential regulations with agencies," he said. "We wouldn't expect them to drop planned proposals altogether, but those proposals probably won't be as assertive as they would have been previously."
Adam Rust, director of financial services at the Consumer Federation of America, says another case decided Monday could be equally as consequential. In Corner Post Inc. v. Board of Governors of the Federal Reserve, the court ruled 6-3 that the long-standing statute of limitations for bringing a suit against a regulation was unconstitutional, a decision that could enable businesses to file suits and challenge rules over a longer time horizon.
"Often, an agency rule represents a negotiated compromise among many views [where] few get everything they want, few get nothing, most are heard and then markets adjust to the new norms, [but] there are always a few who disagree strongly," he said. "This rule is a recipe for those outliers to pursue fishing expeditions."
Rust added that agencies will now need to ensure they are not relying too heavily on the assumption that courts will defer to their perspective. Even so, he cautioned that the heightened threat of legal action could have the effect of stripping rules of their potency.
"Agencies will have to be careful not to rely on Chevron deference when issuing rules, but it is equally important that skittish agencies push back against litigious bullies," he said. "They must make the right rule, not just the one palatable to extremist views."
Solomon notes that the post-Chevron era could reshape rules that apply existing statutory authorities to new and emerging technologies like crypto or artificial intelligence. Congress could incorporate the decision by building express delegations of authority to implementing agencies into legislation, she said.
"In Loper Bright, the Supreme Court recognizes that Congress sometimes expressly delegates discretionary authority to agencies — for example, to define particular statutory terms … [saying] a reviewing court should respect the delegation while policing the agency's adherence to its boundaries," she said. "So in enacting new legislation — such as a statutory framework for crypto or AI — Congress may be able to achieve greater predictability about how the statute will work if it expressly delegates authority to agencies in areas where it wants agencies to act."
