ANALYSIS: Why Companies Hope to Overturn Chevron Deference

The US Supreme Court heard arguments in mid-January in two conjoined cases involving small fishing companies disputing a federal agency rule requiring them to pay the costs of a government observer on their vessels.

The cases go to the heart of a legal doctrine established by the high court’s 1984 ruling in Chevron v. Natural Resources Defense Council. Under the Chevron doctrine, courts defer to a federal agency’s reasonable interpretation of ambiguous laws.

However, a Supreme Court decision would be felt well beyond the fishing community. Corporate interests in the case abound: If the court overturns the Chevron doctrine, federal agencies would be weakened in their ability to regulate businesses.

A look at recent federal court decisions involving Chevron deference and the amicus briefs filed in the two cases—Loper Bright Enterprises v. Raimondo and Relentless v. Dept. of Commerce—reveals the subtle but pervasive corporate interests behind overturning Chevron.

Deference Is Awarded Often, Across Agencies

A corporation may contest a federal agency action that it believes is a government overreach by asserting that the action isn’t based on a statute or is an unreasonable take on Congress’ intent. According to a BCite search of court opinions citing the Chevron case, corporate plaintiffs have contested a federal agency’s action using the doctrine 68 times in federal circuit courts since Jan. 1, 2022.

The 68-case data set only includes arguments in federal circuit court with a three-fifths rating of citation frequency on the search. This filter captures the relevant cases in which the court examined the agency action with at least Step One and Step Two of the Chevron deference test and removes cases that merely cite to the Chevron case.

Based on the court outcomes in the past two years, the number of times that courts awarded Chevron deference to federal agency actions was more than double the times where courts denied deference.

Overall, the 68 cases implicated 21 federal agencies whose actions were challenged. Aside from the Department of Education, which had one claim that was denied deference, all the agencies were ultimately awarded Chevron deference more often than not.

The federal agency with the most Chevron deference claims filed against it was resoundingly the Department of Health and Human Services (HHS), with 19 total Chevron claims, 11 of which (58%) were decided in favor of the agency. The Department of Labor (DOL) came in second place, with seven total Chevron claims, five of which (71%) were decided in favor of DOL.

Currently, well over half of the claims against these two agencies’ actions—which are major players in corporate regulation—are awarded Chevron deference, according to Bloomberg dockets data. A Supreme Court ruling that would limit Chevron’s application would likely be welcomed by corporations.

Corporate Amicus Filers Think Chevron Should Go

Amicus briefs—although nonbinding—offer insights into various stakeholders’ vested interests in the related court matter.

An analysis of the 68 amicus briefs filed on the merits of both Loper Bright and Relentless after May 1, 2023—when the Supreme Court granted certiorari for Loper Bright—and after Oct. 13, 2023, when Court agreed to hear Relentless, is revealing.

On its face, the results don’t indicate that corporate stakeholders are highly interested in the Chevron deference battle—the business trade associations only comprise 13% of the 68 amicus briefs filed. While these briefs do represent an adequate cross-section of the business sector, including filings by the US Chamber of Commerce, National Business Organizations, and Small Business Associations, advocacy and research groups (44% of the total amicus briefs filed) and public interest law firms (18%) largely dominated.

A closer look at the positions of the amici from all the groups, however, shows that they heavily favor a ruling overturning the Chevron doctrine.

At least three-fourths of both the advocacy and research groups and the public interest law firms advocate overturning Chevron, based on their briefs. Two-thirds of the business trade associations also called for overturning the Chevron deference in their amicus briefs.

And a further look at the briefs—this time at the mandatory “Interests of the Amici Curiae” sections, which is where a filer essentially admits why the issues are important to them, is an eye-opener.

Thirty of the 42 advocacy and research groups and public interest law firms stated their interests coincided with individual rights, free enterprise, or limited government—interests that are often aligned with a pro-business stance on Chevron deference. And a closer look reveals that big donor funding reported to be linked to prominent free enterprise advocates such as the Charles Koch Foundation can be traced to many of these amicus filers, such as the New Civil Liberties Alliance.

Interestingly, only one category—law professors—didn’t advocate for the court to overturn Chevron deference.

Corporations to React if Chevron Is Overturned

The Supreme Court is expected to hand down the decision for Loper Bright and Relentless in June. If the court decides to overturn or to narrow the Chevron doctrine, there likely won’t be an immediate impact on current federal agency actions. However, there would likely be an immediate spike in litigation against agency actions in the federal court system—and HHS and DOL are likely primary targets.

The plaintiffs or related parties in these claims will probably include the advocate and research groups and public interest law firms that have been filing the related amicus briefs, as well as actual corporations.

Why are corporations getting involved? The economic stakes are high. The decision in the two cases may shape the forthcoming federal agency crypto and climate rules.

And with the question of the regulation of artificial intelligence looming, axing deference to agencies—the presumed subject-matter experts—could open an enormous can of worms if courts are asked to weigh in on ambiguous AI regulation—which along with cryptocurrency and climate data, involves highly technical information.

Corporate leadership should take this time before June to better understand how Chevron deference impacts their business models and make plans on how to navigate a potential new regulatory framework without agency deference.

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