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Corporate lobbyists fear new lawsuits after Supreme Court limits federal government power

Just hours after the Supreme Court drastically limited the power of federal agencies, conservatives and corporate lobbyists began to make plans to use the favorable ruling to push for more action in Washington to eliminate climate, financial, health, labor and technology regulations.

The initial strategy development underscored the significance of the justices’ landmark decision, which rocked the nation’s capital and now appears set to trigger years of litigation that could redefine the U.S. government’s role in modern American life.

The legal bombshell dropped Friday when the Supreme Court’s six conservatives invalidated a decades-old precedent that said federal judges should rely on regulators in cases where the law is ambiguous or Congress does not make its intentions clear. Chief Justice John G. Roberts Jr., writing for the majority, called the framework “unworkable” and argued at one point in his opinion that it “prevents judges from ruling.”

Many conservatives and businesses had long been annoyed by the legal doctrine known as Chevron Respect after a case involving the oil giant in the 1980s. They had encouraged the Supreme Court to overturn the precedent in a flurry of legal filings last year, and then rejoiced when the nation’s highest judicial body sided with them this week – paving the way for the industry to launch a renewed assault on the power and influence of the executive branch.

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“This means that it will be difficult for agencies to defend their legal positions,” said Daryl Joseffer, executive vice president and general counsel at the U.S. Chamber of Commerce Litigation Center, which filed an amicus curiae brief in the case. “This means that it will be easier to challenge some regulations than it has been before. This, of course, has a real impact on whether it is worth filing some lawsuits.”

Some of the most powerful corporate interests under government supervision predicted the decision could help them in their ongoing legal battles with the Biden administration over its policies to cancel student loans, improve overtime pay, ensure net neutrality, protect waterways from pollution, and improve investor protections, including the administration’s first efforts to regulate cryptocurrencies.

“I think a lot of people in the industry associations and trade associations are thinking about this right now,” said Beth Milito, executive director of the legal department of the National Federation of Independent Business, a Washington-based lobby group. “In light of this decision, should we re-examine ongoing litigation or aggressive investigations? Are there new avenues of attack that we can now address?”

The NFIB has already filed or joined several lawsuits against the Biden administration, including two recent cases challenging federal regulations that could improve worker benefits and increase overtime pay. In the future, the group expects lawyers to “elevate” the ruling Chevron with judges deciding whether the Labor Department has repeatedly exceeded its authority, Milito said.

But she predicted that the most lasting consequence of the Supreme Court’s ruling may be that it could deter some federal agencies from making rules at all, perhaps even causing them to “put down the pen and pause.”

“We want the agencies to stay in their lane,” Milito said.

Through the victory ChevronConservative politicians and corporate lobbyists have won their most significant legal victory in an aggressive, decades-long campaign to limit the influence of the federal government. Earlier in the week, the court’s conservatives also issued rulings weakening federal climate regulations and making it harder for agencies like the Securities and Exchange Commission to take enforcement action, sparking further jubilation among industries facing such scrutiny.

“I think this means a level playing field for anyone who is sued by a federal agency or sues a federal agency,” said Mark Chenoweth, president of the New Civil Liberties Alliance, which represented one of the plaintiffs in the Supreme Court case that overturned the ruling. ChevronThe group has received millions of dollars from the conservative political network of billionaire Charles Koch and his late brother David and represents clients in other lawsuits seeking to overturn federal regulations.

Chenoweth said the loss of ChevronIn particular, it means that “citizens can rely on an impartial and independent court to assess whether their arguments or their interpretation of the law are better than the authority’s interpretation of the law.”

While it may take years to unravel the exact legal implications, conservative advocates and industry lobbyists – some of whom are connected to the Supreme Court litigation – have signaled they would be happy to use the issue as leverage or file new lawsuits.

The National Association of Manufacturers, a lobbying group whose board includes top executives from Dow, Caterpillar, ExxonMobil and Johnson & Johnson, specifically pointed to alleged overregulation by the SEC and EPA. The group’s president, Jay Timmons, said in a statement that the NAM will soon be “in action … to fight the new regulations we face today and whatever may come our way in the next administration.”

The American Bankers Association, meanwhile, said it would “continue to fight to ensure that banking regulators follow the law whenever they exercise their authority.” The group, whose members include Bank of America, JPMorgan Chase and Wells Fargo, has sued the Biden administration in recent months over rules designed to limit the fees they can charge customers who overdraw their bank accounts. (It did not respond to a request for comment.)

And the National Association of Home Builders, which represents thousands of home builders and suppliers, said it could benefit from the judges’ decision in a dispute with the federal government over new environmental regulations. The NAHB has joined with other home builders’ associations to sue the EPA over its rules to combat pollution of small bodies of water, arguing that its actions exceed the agency’s authority and make it harder to build new homes.

Tom Ward, the association’s vice president of legal counsel, said he expects the NAHB to forward “this opinion” to a judge hearing the Texas waterfall case to “remind the court now that there is no respect for the agency.”

The legal wrangling ultimately underscored a harsh reality in Washington: Because of partisan gridlock in Congress, federal agencies have increasingly taken a more active role in policymaking. Political disagreements have often prevented lawmakers from seriously addressing the nation’s most intractable problems, creating a vacuum that the sprawling regulatory bureaucracy has sought to fill, sometimes in ways that have provoked fierce opposition.

“I’ve sat in on bills being drafted, and legislation often gets passed by being deliberately vague,” said Tom Wheeler, the former Democratic chairman of the Federal Communications Commission (FCC), who faced legal challenges from Internet providers over his agency’s work during the Obama administration interpreting the basic 1930s telecommunications law.

Wheeler said the regulatory gaps are particularly glaring in the technology space because Congress has failed to craft clear new rules on some of the most timely issues of the digital age. Without legislative guidance or deference from the courts, federal agencies may now struggle to respond to new challenges – such as the rise of artificial intelligence – because they are now unable to “regulate anything without Congress addressing it,” he said.

As federal agencies lose a crucial line of defense, many legal experts, consumer advocates and Democratic lawmakers fear far-reaching consequences.

The American Cancer Society, along with numerous health organizations, warned this week of “significant disruption” to insurance programs, government food and drug control systems, and patient health. Tax experts had already predicted the end of the Chevron could cause “real chaos” for the IRS as it tries to implement tax law changes recently ordered by Congress. And some climate activists, including the nonprofit Climate Power, complained that the Supreme Court has made it “harder to protect our air and our water.”

“Every time the court has taken a step in that direction, (lawsuits) have followed,” said Sharon Block, a professor at Harvard Law School who previously served as head of the Office of Information and Regulatory Affairs under Biden. “They are now just invitations everywhere to challenge the actions of federal agencies when they are trying to help people.”

Meanwhile, on Capitol Hill, some Republican lawmakers expressed hope of hastening what they see as “the beginning of the end of the administrative state.” In a joint statement, House Speaker Mike Johnson (R-Louisiana) joined other Republican politicians in promising that the chamber’s committees will soon “assume an oversight role to ensure that agencies comply with the court’s decision and no longer take excessive interpretive liberties in administering the laws under their jurisdiction.”

Before the Supreme Court’s decision, Johnson and other Republicans formally filed a brief urging the justices to overturn the precedent set in Chevron v. Natural Resources Defense Counciland argued last July that federal agencies should possess “only the powers delegated to them by Congress.” On Friday, some GOP lawmakers even circulated a list of Biden-era policies they wanted to scrutinize, including the administration’s work on “energy and agricultural production” as well as Title IX, an anti-sex discrimination law that the Education Department recently expanded to protect transgender students.

“It’s time for lawmakers to take back their legislative power,” said Republican Rep. Kevin Hern (Okla.), author of the list of policies and chairman of the Republican Study Committee, the largest group of Republican lawmakers in the chamber. “This is an opportunity for us to be better legislators – and make sure unelected bureaucrats don’t do this job for us.”

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