Corporate lobbyists eye new lawsuits after Supreme Court limits federal power

The legal bombshell arrived Friday, when the six conservatives on the Supreme Court invalidated a decades-old legal precedent that federal judges should defer to regulatory agencies in cases where the law is ambiguous or Congress fails to specify its intentions. Writing for the majority, Chief Justice John G. Roberts Jr. described the framework as “unworkable,” at one point arguing in his opinion that it “prevents judges from judging.”

Many conservatives and businesses long had chafed over the legal doctrine, known as Chevron deference after a case involving the oil giant in the 1980s. They had encouraged the Supreme Court over the past year to dismantle the precedent in a flood of legal filings, then rejoiced when the nation’s highest judicial panel sided with them this week — paving the way for industry to commence a renewed assault against the power and reach of the executive branch.

“This means that agencies are going to have a hard time defending their legal positions,” said Daryl Joseffer, the executive vice president and chief counsel at the U.S. Chamber of Commerce Litigation Center, which filed an amicus brief in the case. “That means it will be easier to challenge some regulations than it used to be. That obviously has a real impact on whether it’s worth bringing some cases.”

Some of the most powerful corporate interests under the government’s watch predicted the decision might aid in their ongoing legal clashes with the Biden administration over its policies to cancel student debt, improve overtime pay, ensure net neutrality, protect waterways from pollution and enhance investor safeguards, including the government’s nascent work to regulate cryptocurrency.

“Right now, I think a lot of folks out there in trade associations, business associations, are thinking about that,” said Beth Milito, the executive director of the legal arm at the National Federation of Independent Business, a Washington-based lobbying group. “Should we reexamine any ongoing litigation or aggressive investigation in light of this decision? Are there new areas of attack we can now raise?”

NFIB already has filed or joined multiple lawsuits against the Biden administration, including two recent cases targeting federal rules that could enhance workers’ benefits and expand overtime pay. Going forward, the group expects lawyers to “raise the decision” on Chevron with judges as they weigh whether the Labor Department repeatedly overstepped its authorities, Milito said.

But she predicted the most lasting consequence of the Supreme Court’s ruling might be that it deters some federal agencies from issuing rules in the first place, perhaps convincing them to “put their pen down and pause.”

“We want agencies to stay within their lane,” Milito said.

By defeating Chevron, conservative policymakers and corporate lobbyists scored their most significant legal victory in an aggressive, decades-long campaign to curtail the reach of the federal government. Earlier in the week, the court’s conservatives also issued rulings that weakened federal climate regulations and made it harder for agencies including the Securities and Exchange Commission to bring enforcement actions, drawing further celebration from the industries facing such scrutiny.

“I think what this means is a level playing field for anyone who is sued by a federal agency, or who sues a federal agency,” said Mark Chenoweth, the president of the New Civil Liberties Alliance, which represented one of the plaintiffs in the Supreme Court case that overturned Chevron. The group has received millions of dollars from the conservative political network of billionaire Charles Koch and his late brother, David, and it represents clients in other lawsuits that seek to quash federal regulations.

Chenoweth said the loss of Chevron, in particular, means that “folks will be able to count on having an unbiased, independent court assess whether their arguments, or their interpretation of the law, is better than the agency’s interpretation of the law.”

While the exact legal implications may take years to untangle, conservative advocates and industry lobbyists — some tied to the Supreme Court fight — signaled they were eager to leverage it or bring fresh lawsuits.

The National Association of Manufacturers, a lobbying group whose board of directors includes top executives from Dow, Caterpillar, ExxonMobil and Johnson & Johnson, specifically called attention to what it described as regulatory overreach at the SEC and the Environmental Protection Agency. The group’s president, Jay Timmons, said in a statement that NAM would soon be “on the field … to fight back new regulations we are facing today as well as whatever may come our way in the next administration.”

The American Bankers Association, meanwhile, said it would “continue to fight to ensure that bank regulators follow the law every time they exercise their powers.” The group, whose members include Bank of America, JPMorgan Chase and Wells Fargo, has sued the Biden administration in recent months over rules meant to limit the fees they can charge customers who are late on their credit card payments. (It did not respond to a request for comment.)

And the National Association of Home Builders, which represents thousands of builders and suppliers in the housing industry, said it might benefit from the justices’ decision in a fight with the federal government over new environmental regulations. NAHB has joined with other housing groups to sue the EPA over rules targeting pollution in small waterways, arguing its approach oversteps the agency’s authority and makes it harder to construct new housing.

Tom Ward, the vice president for legal advocacy for the association, said he expected NAHB to “send this opinion” to a judge hearing the water-related case in Texas to “remind the court now there is no deference to the agency.”

The legal wrangling ultimately served to underscore a harsh reality in Washington: Federal agencies increasingly have taken a more active role in crafting policy because of partisan gridlock in Congress. Political divisions often have prevented lawmakers from fully attending to the nation’s most intractable problems, creating a void that the sprawling regulatory bureaucracy has tried to fill, sometimes in ways that draw sharp opposition.

“I’ve sat in the room as legislation has been marked up, and the way legislation gets through many times is to be purposefully imprecise,” said Tom Wheeler, the former Democratic chairman of the Federal Communications Commission, who faced a legal onslaught by internet providers over his agency’s work during the Obama administration to interpret its foundational 1930s-era telecom law.

Wheeler said the regulatory gaps have been especially glaring in technology, since Congress has failed to articulate clear new rules on some of the most cutting-edge issues in the digital age. Without guidance from legislation or deference from the courts, federal agencies may now struggle to respond to novel challenges — like the rise of artificial intelligence — as they find themselves newly unable “to address anything unless the Congress addresses it,” he said.

With federal agencies losing a pivotal line of defense, many legal experts, consumer advocates and Democratic lawmakers said they feared the consequences could prove wide ranging.

The American Cancer Society joined a wide array of public health groups this week to warn about the prospect of “significant disruption” to insurance programs, federal food and drug review systems and patients’ health. Tax experts previously predicted the end of Chevron could “create a real mess” for the Internal Revenue Service as it looks to implement recent, congressionally mandated changes to the tax code. And some climate advocates, including the nonprofit Climate Power, fretted that the Supreme Court had made it “harder to protect our air and water.”

“Every time the court has taken a step in this direction, we have seen [lawsuits] follow,” said Sharon Block, a professor at Harvard Law School who formerly served as the administrator of the Office of Information and Regulatory Affairs under Biden. “They’re now just invitations everywhere to challenge the actions of federal agencies when they’re trying to help people.”

On Capitol Hill, meanwhile, some Republican lawmakers said they hoped to accelerate what they saw as the “beginning of the end of the administrative state.” In a joint statement, House Speaker Mike Johnson (R-La.) joined other GOP leaders in pledging that the chamber’s committees would soon be “conducting oversight to ensure agencies follow the Court’s ruling and no longer engage in excessive interpretive license in administering statutes under their jurisdiction.”

Before the Supreme Court ruling, Johnson and other Republicans formally submitted a legal brief encouraging the justices to invalidate the precedent set in Chevron v. Natural Resources Defense Council, arguing last July that federal agencies should “possess only those powers given to them by Congress.” On Friday, some GOP lawmakers even circulated a menu of Biden-era policies they hoped to scrutinize, including the administration’s work on “energy and agricultural production” as well as Title IX, an anti-gender-discrimination law that the Department of Education recently expanded to protect transgender students.

“It’s time for lawmakers to take back our legislative power,” said Rep. Kevin Hern (R-Okla.), the author of the list of policies and leader of the Republican Study Committee, the largest block of GOP lawmakers in the chamber. “This is an opportunity for us to be better legislators — and ensure that unelected bureaucrats aren’t doing that job for us.”