Understanding the Recent 6-3 Supreme Court Decision on Agency Deference
July 1, 2024
The recent 6-3 Supreme Court decision in the Loper Bright case overturns the 1984 “Chevron deference” precedent, rejecting the practice of federal courts deferring to governmental agencies on legal interpretations of ambiguous statutory language.
The impact of this ruling is significant as it shifts the balance of power between agencies and the judiciary in interpreting laws and deciding the best ways to apply them. Moving forward, federal courts are likely to engage in a more thorough review of agency interpretations, rule-making and actions.
- This decision, the Supreme Court’s ruling last week rejecting the SEC’s in-house enforcement of securities fraud claims, and the recent decision of the U.S. Fifth Circuit Court of Appeals to vacate the SEC’s Private Fund Adviser Rules, significantly limit the SEC’s reach over private fund advisers. However, this will likely not impact the SEC’s general focus on fiduciary considerations and the duty to disclose actual or potential conflicts of interest in their examinations, investigations, and enforcement sweeps of investment advisers.
The 6-3 decision, along ideological lines, discards a 1984 precedent directing federal courts to defer to agency legal interpretations when the statutory language passed by Congress is ambiguous.
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