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July 11, 2024
The United States Supreme Court has struck down a doctrine of administrative law known as “Chevron deference” in Loper Bright v. Raimondo, by a majority of 6-3
The doctrine held that federal courts should defer to a regulator’s interpretation in a dispute over an ambiguous law
With the overruling of Chevron, courts will now revert to the older doctrine of “Skidmore deference” which reduces the weightage given to the regulator’s view of the law, and requires the courts to take a more hands-on approach
The interpretation will also be subject to the recently defined “Major Questions Doctrine” which creates a presumption that the legislature does not delegate to the executive any power to decide on issues of major political or economic significance
The ruling is likely to have a significant impact on environmental regulations and the fight against climate change, along with the regulators for labour and health, and the SEC
The striking down of the Chevron Deference comes just a day after another significant ruling in SEC vs Jarkesy, which also raised important questions about the extent of power that can be exercised by regulators under broadly worded skeletal laws
In SEBI vs Mega Corporation Ltd., the Indian Supreme Court relied on a quasi-judicial body’s interpretation, holding that “Not every interpretation of the law would amount to a question of law. This freedom to evolve and interpret laws must belong to the Tribunal to subserve the Regulatory regime for clarity and consistency”
Courts in India have generally deferred to the regulator on matters of regulatory ambiguity. If Indian courts were to follow the US, the general approach to defer to regulator’s interpretation is likely to stand diluted