The Supreme Court’s Chevron Deference Rollback and Its Ripple Effect on Agency Rulemaking for Business
I recollect being in a boardroom in 2016 and watching the client scramble to accommodate an agency’s immediate change to its interpretation of an existing rule that had been in effect for over ten years. We had no recourse; the agency’s interpretation of the law was the law – it had been for the last forty years. With the Supreme Court’s recent ruling (Loper Bright Enterprises v. Raimondo), that long standing era of deference is history. The focus has changed, and for business leaders, it will be the most significant regulatory change that has ever occurred.
THE ISSUE: For decades Federal Agencies have used the Chevron Doctrine and have looked for ways to expand upon their authority and have created rules and regulations that were not clearly intended by Congress. This has led to “regulatory creep,” making it almost impossible for businesses to develop long-term operations plans.
LIMITATIONS: You can no longer look to an agency for an interpretation of a vague statute to protect your business. You must now operate under the reality that courts rather than administrative agencies will determine the true meaning of the statutes.
SOLUTION: You will need to go from “agency-based compliance” to “statute based risk management.” This will guide you through how to assess your risk and develop a successful defense to an agency’s action in a court of law.
Prerequisites and Context
To follow the guidelines above, it is important for you to have a good understanding of the statutes that apply to your business. You don’t need to be an attorney, but you do need your legal department to identify the relevant sections of the United States Code that grant the authority to the rules you follow.You will require a compliance monitoring platform to follow ongoing litigation against agencies such as the SEC, FTC, and EPA, and AI regulatory actions.
Understanding the Post-Chevron Regulatory Landscape
The Shift from Agency Ambiguity Interpretation to Judicial Review
Previously, in instances where a statute did not define what is meant by a phrase contained within the statute, it would have been the job of the agency to make that decision. When the SEC or EPA made a statement of what they believed was meant by something contained within a statute, the courts typically deferred to the agency’s views on what they felt the law meant. This has now changed and the judges are instructed to apply their independent judgment to all matters brought before them; such that when judges are faced with an ambiguous statute, they are required to make their own judgment as to what was intended based upon the language of the statute—not by relying upon what an executive branch agency states.
Historical Context: From Chevron Deference to Loper Bright
Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. set forth the idea that, when Congress is silent or has drafted a statute that could be interpreted in multiple ways, it would be appropriate for an executive branch agency to fill in the gaps in that statute. This was at the time, the foundation of modern administrative law. The Loper Bright Enterprises v. Raimondo ruling basically overruled Chevron by creating a new standard for determining whether or not an executive branch agency may enact a new regulation.
Strategic Planning: How Chevron Deference Overturned Business Regulation 2026
Assessing Exposure to Administrative Law Court Challenges
Each of the rules your business is currently governed by should be reviewed on a case-by-case basis for determining if there is a statutory basis for the regulation or whether it is based upon an agency’s interpretation or guidance, thereby subjecting your business to administrative legal challenges.
Mapping Internal Compliance to the New Judicial Standard
Do not consider an agency’s guidance or interpretation to be binding. All agency guidance or interpretation that is not supported by the statutory language of a law creates a position of challenge.
Risk-Assessment Matrix (Text-Based):
- High Risk: Broad, vague statutory language based rules incurred a higher degree of risk.
- Medium Risk: Specific, but outdated, statutory language based rules incurred a moderate degree of risk.
- Low Risk: Clear, modern statutory text mandated based rules incurred a limited degree of risk.
What Didn’t Work For Me
When I first began my career, I advised my client to “wait and see” what happened with a new agency rule when it was issued. I honestly thought the agency would issue clarifications on it later. I was wrong. The agency went on to support and uphold the rule and my client incurred a tremendous fine for the failure of us to have challenged the authority of that rule soon enough. Don’t wait for the agency to correct itself. If the agency has not issued a rule with a definitive statutory basis, then the rule has the potential to create an exposure.
Navigating High-Stakes Regulatory Hurdles
SEC Climate Rule Legal Challenge and Disclosure Strategy
SEC climate rule legal challenge is the clearest representation of this new environment. The SEC is attempting to require disclosures that some are arguing are beyond the scope of their original charter. It would be in your best interest as someone within the finance industry to not only prepare yourself for the implementation of that rule, but also prepare yourself for the potential of that rule being struck down or substantially limited in a court of law.
FTC Noncompete Ban Injunction and Employment Contract Audits
The FTC noncompete ban injunction exemplifies that the courts will step-in when an agency overreaches their authorities. If you use noncompetition agreements in your contracts, don’t just remove them. Audit your contracts to ensure that they are defensible under state law irrespective of the FTC’s actions at the federal level.
EPA Power Plant Rule: Operational Contingency Planning
The EPA power plant rule is another massive target. If your operations depend on these standards, you need a “Plan B” that assumes the rule might be vacated.
Decision-Making Flowchart (Text-Based):
- Identify Rule: Is it based on a clear statute or agency “interpretation”?
- Monitor Litigation: Is there an active administrative law court challenges case?
- Evaluate Impact: If the rule is stayed, does your business model hold up?
- Execute: If yes, maintain compliance. If no, prepare for a pivot.
Operationalizing Compliance in an Era of Regulatory Uncertainty
Step 1: Audit Current Agency-Dependent Policies
Go through your internal policies. Highlight every rule that exists only because an agency said so.
Step 2: Engage Legal Counsel for Statutory Interpretation
Don’t ask your lawyers, “What does the agency want?” Ask them, “Does the statute actually give the agency the power to do this?”
Step 3: Monitor the Regulatory Freeze Bill and Legislative Updates
Keep an eye on any regulatory freeze bill proposals. These are designed to stop new rules until the legal landscape settles.
Compliance Documentation Checklist:
- Identify the specific U.S. Code section for each major compliance requirement.
- Document the agency’s justification for the rule.
- Cross-reference that justification against the plain text of the statute.
- Flag any discrepancies for your legal team to review.
Edge Case: Leveraging Judicial Precedent for Competitive Advantage
Challenging Overreaching Agency Mandates in Financial Services
The Loper Bright impact on financial services is huge. Financial institutions/banks and Fintech companies can now say “no” to a “Regulatory Judicial Process” issued by the SEC or CFPB. Now if an agency tries to regulate/restrict a market with regards to the new service without the support of specific regulations, the financial representative will have an increased chance of being able to oppose the regulatory agency’s decision if they go through the administrative process.
Proactive Litigation Strategies for Industry-Specific Rulemaking
Do not wait for an agency rule to end up in court before taking the issue to court. If an internal review shows an agency’s rule is outside of their regulatory power, an agency will collaborate with a trade association to file a Declaratory Judgment.
Best Practices for Long-Term Regulatory Resilience
Building a Defensive Documentation Trail for Agency Audits
A documented defensive audit trail for agencies will help you defend your position to the agency if/when the auditor arrives at your place of business. You should have documentation to demonstrate how you have met the agency’s law/guideline and then you should document your rationale for not complying with the agency’s authority to regulate your conduct according to the law or guideline.
Integrating Loper Bright Impact on Financial Services into Risk Management
You should enhance your current risk management system to include a new category “Risk of Regulatory Authority” which will allow you to determine if after your internal analysis regarding the agency’s capacity to regulate according to the agency’s statutory authority the agency’s rules will be reliant or not.
Burden of Proof Comparison (Text-Based):
- Pre-2024: Agency expertise was assumed correct. The burden was on the business to prove the agency was “arbitrary and capricious.”
- Post-Loper Bright: The burden is on the agency to prove their rule is supported by the text of the law.
Frequently Asked Questions
How does the end of Chevron deference affect my current SEC compliance obligations?
There will not be any immediate change. Businesses will continue to follow current regulations. However, if the SEC or other agency issues unjustified new agency rules, then you will now be able to utilize existing case law as legal support to challenge the new unjustified rules.
Can my business proactively challenge an agency rule before it is fully enforced?
You may challenge the enforcement of an agency’s order; however, this is considered to be legally complex. You will need a legal determination of your standing to appeal against the agency’s order and if your rights have been violated under the law. You should work with a qualified attorney to determine if you can challenge the agency’s order.
What should investors look for when evaluating regulatory risk in a post-Chevron environment?
You need to look for companies that rely on agency “guidance” rather than authority by statute. These types of companies pose much more risk than the same company did two years ago.
