On June 28, 2024, the U.S. Supreme Court issued a significant ruling regarding the Chevron deference, impacting industries and businesses regulated by federal agencies such as the Consumer Financial Protection Bureau (CFPB), the Securities and Exchange Commission (SEC), and the Federal Trade Commission (FTC).
The Court reviewed two federal cases, Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce, which involved the application of Chevron deference established by a prior Supreme Court decision 40 years ago in Chevron v. Natural Resources Defense Council. In that landmark case, the Court ruled that federal courts should defer to regulatory agencies' interpretations of ambiguous statutory language passed by Congress.
Today's ruling grants judges greater discretion in analyzing claims from consumers and businesses affected by unclear regulations. It also compels regulatory agencies to interpret regulatory language more cautiously and judiciously while urging Congress to provide clearer and more specific legislative guidance for regulatory actions.
The American Financial Services Association (AFSA) has noted instances where agencies like the FTC and CFPB have exceeded their congressional authority. Examples include the FTC's rule imposing a nationwide ban on almost all noncompete clauses and several CFPB actions related to financial services industry data collection based on flawed interpretations or disregard of congressional intent. The CFPB's effort to create a nonbank registry on enforcement matters was also cited.
AFSA expressed hope that today's Supreme Court ruling will encourage the CFPB and other regulatory bodies to reconsider their broad interpretations of congressional guidance. Additionally, AFSA anticipates that Congress will leverage this ruling to enhance oversight and accountability of these agencies and their policies.