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The Supreme Court Has Ruled to Overturn the Chevron Doctrine, Limiting Federal Agencies’ Power

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The Chevron deference, established by the Supreme Court in the 1980s, allowed regulators to interpret the laws under their purview.

  • The United States Supreme Court has overturned a 40-year-old decision that permitted federal regulators to enforce their interpretations of unclear legislation.
  • Without the so-called Chevron concept, the SEC may have a more difficult time pursuing an enforcement agenda in the near-void of legal and regulatory clarity for the cryptocurrency business.

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The United States Supreme Court ruled 6-3 on Friday to severely limit the authority of federal regulators, rejecting a 40-year-old legal precedent that allowed regulatory agencies to interpret the laws they are tasked with executing.

Chevron v. National Resources Defense Council, decided in 1984, established that when the text of statutes is confusing, courts should defer to regulators’ decisions and experience, thereby granting federal regulators the right to enforce their interpretations.

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Since the initial verdict, the so-called “Chevron deference” has permitted regulators to act on time-sensitive issues while Congress considers new legislation. The ruling was based on the fact that agencies are more likely than courts to have the information and competence needed to interpret the laws they implement.

In his majority opinion on Friday, Chief Justice John Roberts described the Chevron concept as “unworkable,” adding that it “allows agencies to change course even when Congress has given them no authority to do so.” Chevron’s vast scope creates unnecessary instability in the law, leaving anyone attempting to plan around agency action in an endless cloud of uncertainty.”

“Chevron is overruled,” Roberts stated. “Courts must utilize their independent judgment in determining whether an agency acted within its legislative jurisdiction, as required by the Administrative Procedure Act. Paying close attention to the Executive Branch’s decisions may assist guide that inquiry. And, when a legislature delegated jurisdiction to an agency in accordance with constitutional constraints, courts must respect the delegation while ensuring that the agency performs within it. However, under the APA, courts are neither required nor permitted to defer to an agency interpretation of the law just because a statute is unclear.

Excessive power

Conservative activists have long criticized the Chevron deference, claiming that it gives unelected federal regulators too much power and fails to hold Congress accountable for passing clearer legislation.

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Associate Justice Elena Kagen dissented, noting, “In every sphere of current or future federal regulation, courts will now play a commanding role.” It is not a job Congress has assigned to them, either through the APA or any other statute. It is a role that the Court has now seized for itself and other judges.”

“Given Chevron’s pervasiveness, the decision to do so is likely to cause widespread disruption.” All that supports today’s conclusion is the majority’s belief that Chevron was incorrect—that it granted agencies too much power and courts too little,” Kagen remarked. “However, new perspectives on the value of regulatory actors and their activity do not warrant revising a cornerstone of administrative law. In that sense, the majority of today has also lost sight of its legitimate function.”

SEC takes on cryptocurrency

Overturning Chevron could have immediate consequences for federal regulators, including the United States Securities and Exchange Commission (SEC), which, under Chairman Gary Gensler, has pursued an aggressive and expansive enforcement agenda in the near-vacuum of legal and regulatory clarity for the cryptocurrency industry. The SEC filed a lawsuit against a number of cryptocurrency organizations, alleging that they violated federal securities laws by providing purchase and trading services for cryptocurrencies that the regulator believes are unregistered securities.

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These cryptocurrency companies, which include Coinbase, Ripple, Binance, and Kraken, among others, have stated in their numerous defenses that the digital assets in question are not securities and that the SEC is exceeding its jurisdiction by charging that the assets fit those standards.

The ruling comes just one day after the Supreme Court struck another blow to federal regulators’ capabilities. On Thursday, the court voted 6-3 to limit the SEC’s use of in-house administrative judges to settle civil fraud charges, claiming that such hearings violate the constitutional right to a jury trial.CRYPTOCASTER® - DECENTRALIZED FREEDOM!


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