In case you missed it, the Supreme Court issued a landmark decision overturning Chevron deference, a legal doctrine that required courts to defer to federal agency interpretations of ambiguous statutes. This ruling fundamentally alters how the regulatory process has operated for the past several decades, and perhaps more practically, has resulted in a flurry of emails from businesses asking their attorneys if this means they can stop complying with regulations altogether. Spoiler: it doesn’t.
When something like this happens, we all want clear instructions on what to do next. But the reality is that it will take time for practical impacts and new legal strategies to come into focus. Challenges to rules and agency actions are expensive and time consuming, and most of us aren’t rushing to the front of the line with our checkbooks excited to litigate.
But that doesn’t mean there’s nothing to do. While it’s still too early to know exactly how the ruling in Loper Bright Enterprises v. Raimondo will change the regulatory landscape, there are certainly tactics employers can implement now that will set them up for success. In particular, enhancing your capabilities around control and visibility of your processes and supercharging your internal experts. And that’s what this series is: a legal realist’s view on the practical implications of the ruling and the steps businesses can take to navigate this new environment.
Chevron Deference and the Role of Agencies Chevron deference stems from the 1984 Supreme Court case Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., which involved the EPA’s interpretation of the Clean Air Act—specifically, what constitutes a “single source” of pollution. Naturally, the law didn’t specify what a “single source” was, so lawyers stepped in. Chevron argued for a narrow definition, like individual smokestacks, while the EPA argued for a broader interpretation, like an entire facility. Putting aside who was right, the Supreme Court sided with the EPA because their interpretation was reasonable and aligned with their expertise in environmental regulations.
That’s essentially how Chevron deference has worked for the past several decades: if an agency’s interpretation is reasonable and within its authority, the court must defer to its expertise. It’s essentially a principle of humility recognizing that judges aren’t the experts, and courts aren’t the most efficient places to resolve complex regulatory disputes. The idea is that by deferring to agencies’ expertise, the courts allow for a more streamlined and specialized regulatory approach.
The Role of Experts and Opportunities for Employers
Critics of Chevron deference have long argued that it undermines the separation of powers by allowing agencies to effectively create laws without proper judicial oversight, leading to potential overreach and inconsistent regulatory interpretations. Despite this, businesses have relied heavily on agency interpretations and the experts they employ to shape compliance strategies, challenge regulations and assess risks. Background check companies depend on Fair Credit Report Act (FCRA) advisory opinions from the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB). Employers look to Department of Labor guidance on overtime pay and worker classification to align their wage and hour policies. Healthcare employers and facilities rely on Occupational Safety and Health Administration (OSHA) and the U.S. Department of Health and Human Services (HHS) for guidelines on workplace safety, infection control and patient privacy. These agency interpretations have provided a relatively stable—albeit complex—foundation for decision-making.
The Supreme Court’s decision in Loper Bright Enterprises v. Raimondo fundamentally changes the landscape. By overruling Chevron deference and requiring courts to exercise independent judgment when determining whether an agency has acted within its statutory authority, the Court essentially killed Chevron deference. Agency interpretations will certainly remain, but they become more instructive than authoritative.
With this shift, the role of agency expertise is now in question. If agency interpretations carry less weight, the need for agencies to maintain a large number of experts is reduced. This creates an opportunity for businesses to make strategic investments. Expertise is moving away from the agencies and will need to be bolstered within businesses and Congress (but don’t hold your breath on the latter). This places much greater emphasis on the role of internal and external legal and industry experts who can provide more tailored interpretations of regulatory requirements.
The Key Opportunity for Employers: Embracing Control
The key opportunity for employers lies in setting themselves up to defend their own interpretations of regulations. With agency interpretations now carrying less weight, the door is opening for businesses to assert their own more tailored interpretations. This is a significant shift, providing employers with the chance to take greater control of their compliance strategies and ensure they are not just passively following guidance, but actively shaping their regulatory environment.
Implementing advanced compliance management systems allows businesses to track regulatory changes in real time and adjust their practices accordingly. Developing internal audit capabilities enables businesses to regularly review and refine their compliance strategies, maintaining control over how regulations are interpreted and applied. By supercharging your internal compliance and operations teams, you can make targeted modifications when it makes sense for your business. The reliance on third-party vendors–with the lack of control that comes with it–often results in lost time and missed opportunities. Investing in control means you can make the changes that align best with your business needs.
By prioritizing control and visibility, employers can better navigate the uncertainties of a post-Chevron regulatory landscape. This proactive approach ensures that companies remain compliant while being agile enough to implement targeted modifications as the regulatory environment evolves.
Up next:We’ll take a closer look at specific regulations and guidance that may be vulnerable or present new opportunities for businesses in this evolving landscape.
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