In 1984, a unanimous U.S. Supreme Court decided Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., allowing the Reagan Administration to interpret the Clean Air Act in a manner that eased restrictions on big polluters. More importantly, the case established a legal doctrine—Chevron deference—that instructs courts to rely on the judgment of government agencies to interpret ambiguities in the laws related to their areas of responsibility. This principle is based on the belief that these agencies have greater expertise and experience in their specific legal domains than the courts do, and that “federal judges—who have no constituency—have a duty to respect legitimate policy choices made by those who do”. Chevron, 467 U.S. at 866.
Earlier this month, the Supreme Court heard oral argument in connection with the cases Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce, which challenged the Chevron deference doctrine. Based on the nature of their inquiries and remarks, the Supreme Court’s six conservative justices indicated that they may very well upend Chevron deference. Such a ruling would hamper federal agencies from continuing to do their important work, give corporations the ability to effectively gridlock policymaking, and ultimately, eliminate important safeguards for American consumers.
This blog provides some examples of how overturning Chevron deference could adversely impact each key issue area that the Consumer Federation of America focuses on. We aim to shed light on the potential challenges and setbacks in advocacy and policy enforcement and emphasize the critical role that Chevron deference plays in supporting the work of federal agencies. These potential impacts underscore the importance of maintaining Chevron deference for the continued protection and promotion of consumer interests and well-being.
Food Safety
Food safety advocates understand all too well that consumers face a gauntlet of preventable harms in the food system not so much because federal regulators enact bad policies, but because they do not take any action at all. Cronobacter in infant formula, dangerous Salmonella in poultry, literally thousands of chemicals in food with unexamined safety records, alcoholic beverage labels that fail to disclose ingredients, allergens and other basic facts—all of these problems and more require new rulemaking, which regulated industry may challenge in court. Despite Chevron deference, the industry and its throngs of well-paid lawyers often prevail, and years of work can go down the drain. Decades of regulatory dysfunction may follow, as has happened in the wake of a federal court of appeals ruling that invalidated the Department of Agriculture’s rules on Salmonella in meat and poultry in 2001. Indeed, USDA’s failure to protect consumers from foodborne illness has become so dire that several large companies have joined consumer groups in support of reform. Many factors undoubtedly contribute to regulatory inertia—a conflicted mission at USDA, a culture of timidity at the U.S. Food and Drug Administration, the revolving door between industry and regulatory agencies in general, the list goes on. However, should the U.S. Supreme Court rule that regulatory agencies are even more susceptible to second-guessing from the courts, the tendency to use litigation risk as an excuse for inaction will grow, and consumers will pay the price. – Thomas Gremillion
Investor Protection
A potential U.S. Supreme Court decision in Loper Bright to unravel the Chevron doctrine poses a significant threat to the Securities and Exchange Commission’s (SEC’s) ability to protect investors from bad actors, promote market integrity and fairness, and ensure investors have the information they need to make informed decisions. At a time when markets, technology, and financial risks are evolving rapidly—perhaps unprecedentedly so given the rise of artificial intelligence, the risks of climate change, and the growth of cryptocurrencies—it is imperative that the SEC keeps pace. Upending Chevron would fundamentally jeopardize the SEC’s ability to do so.
Even now, the SEC’s investor protection efforts continually face the threat of litigation from industry opponents. If the Court tips the scales even further by limiting the SEC’s authority to interpret and apply the securities laws, then the prospects for strong, lasting investor protections would only get worse. Policing our markets and protecting investors from misconduct demands a level of expertise and precision that only the SEC possesses, and that neither courts nor Congress can match. Limiting the SEC’s ability to exercise its authority would only serve to harm investors, diminish market integrity, and destabilize our financial system. – Micah Hauptman / Dylan Bruce
Housing
The overruling on Chevron deference would have far-reaching consequences for the ways Americans are housed. Over the last forty years, this jurisprudence has supported the ability of federal agencies to effectively regulate American corporations and protect consumers. Within housing this includes the ability of agencies to implement federally- mandated rental protections and housing counseling, offer fair housing oversight, enforce federal emission and building standards, and protect homeowners against exploitative mortgage products. For example, in 2023, after years of collaboration between three federal banking agencies (the FDIC, Federal Reserve Board, and OCC) and several rounds of vigorous public input, new, modernized rules interpreting the 1977 Community Reinvestment Act were released: a deeply collaborative product that responds to the unique realities of banking and community development today.
The overruling of Chevron risks making these types of rulemakings all but impossible and allows the worst acting corporations and their trade groups to gridlock policymaking by tying decisions up in courts. By contrast, federal agencies are led by politically appointed leaders, are accountable to Congress, and staffed by policy experts who often bring decades of experience. It is essential that we allow federal agencies to continue to do their important work and make sure that American consumers live in safe and affordable homes, are protected against housing discrimination, and can rely on fair and transparent mortgage products. – Sharon Cornelissen
Product Safety
The U.S. Supreme Court’s decisions in Loper Bright Enterprises v. Raimondo and Relentless v. Department of Commerce could undermine consumer safety and health. The potential safety ramifications are enormous and could implicate vehicle safety standards, phthalates concentrations in children’s toys, drugs, medical devices, and so much more. The federal agencies tasked with ensuring public health and safety rely on their agencies’ vast technical and scientific expertise. Subject matter experts can include engineers, epidemiologists, chemists, and other complex fields. Neither Congress nor judges have access to the expansive technical expertise of federal agencies. Unlike the judicial system, federal agencies provide the public with the chance to comment on proposed regulation. As such, health and safety agencies can utilize critical information from product safety professionals and safety advocates. The foundational principle of Chevron enables agencies to keep consumers safe and healthy. – Courtney Griffin
Consumer Protection
The Chevron doctrine correctly defers to subject matter experts at agencies like the Federal Trade Commission who live and breathe consumer protection on a daily basis and who are accountable to the public through legislative oversight and extensive transparency requirements. If the Supreme Court strikes down Chevron, inexperienced and uninformed political appointee judges can freely question regulatory interpretations and create harmful case law that is difficult to overturn. Such a decision will inevitably erode longstanding, strong safeguards that keep Americans safe, healthy, and shielded from predatory and fraudulent practices. – Erin Witte
Financial Services
Without Chevron deference, the current practice of permitting regulators to interpret regulatory ambiguities in consumer financial protection law will make consumers vulnerable to discrimination and undermine innovation in the marketplace.
In almost every facet of our economy, technology is disrupting business practices and permitting new risks to consumers. Since the 19th century, commercial banking has been understood to consist of lending money, taking deposits, and paying checks. A judge with experience in banking law should readily grasp the meanings of those activities and their implications for our economy. On the other hand, emerging technologies require policy professionals with a deep understanding of highly technical topics. Federal regulatory agencies employ these experts. Their wisdom benefits policymaking.
Addressing discrimination in artificial intelligence is among the developments likely to require deep understanding as a precondition for successful regulatory implementation of existing banking laws. Even an attorney with a career of experience in fair lending law would be challenged to evaluate the fairness of an AI-driven algorithm, for example. The Equal Credit Opportunity Act (ECOA), the Fair Housing Act (FHA), the Fair Credit Reporting Act (FCRA) and the Federal Trade Commission Act (FTCA) are among the laws whose fairness standards can be applied to algorithmic decision-making in lending and lending-adjacent activities.
Inaction by the institution with authority for AI governance, be it a regulator or the Courts, will lead to problems for all affected stakeholders. Consumers will be vulnerable to discrimination and without regulatory clarity, lenders will be anxious to try AI out of fear of legal jeopardy. Markets need clarity on how fairness is defined and measured and even on how to identify protected class status when lenders are prohibited from soliciting demographic information directly. The Supreme Court must uphold the principle of Chevron deference. – Adam Rust