In June 2024, the U.S. Supreme Court issued three landmark decisions— Loper Bright Enterprises v. Raimondo, Corner Post, Inc. v. Board of Governors of the Federal Reserve System, and SEC v. Jarkesy— that may transform the regulatory environment for businesses. These decisions collectively redistribute authority between federal agencies and the judiciary, presenting both challenges and opportunities for businesses. This article examines what corporate counsel can expect from these rulings, framing regulatory compliance strategies moving forward.
Loper Bright marks a pivotal shift in administrative law by overturning Chevron deference. Historically, under Chevron deference, courts deferred to agency interpretations of statutes that are “‘silent or ambiguous [as] to the specific issue’ at hand.” By overturning Chevron, the Supreme Court empowered federal courts to supply their own interpretation of otherwise ambiguous statutes. Loper Bright curtails the broad regulatory power of federal agencies to implement Congressional acts without requiring additional legislation. The breadth of the decision should not be overstated.
Loper Bright abolished Chevron deference while keeping other deference principles in place. First, Loper Bright only withdrew agency authority for actions predicated on statutory ambiguity or silence. It does not disrupt the validity of rules or regulations grounded in clear congressional mandates. Second, under Loper Bright, when an agency’s interpretation is at issue, courts must employ “traditional tools of statutory construction” to determine the “best reading of the statute.” This requirement does not compel courts to reject an agency’s interpretation. Rather, federal courts may uphold an agency’s interpretation if they conclude it is the most reasonable construction of the statute. Third, Loper Bright does not affect traditional judicial deference to agency fact-finding. Under the Administrative Procedure Act (APA), federal courts can only overturn findings of fact that are “unsupported by substantial evidence.” This deferential standard remains intact, since Loper Bright only applies to conclusions of law. Fourth, Loper Bright does not overturn prior cases relying on Chevron. Thus, plaintiffs cannot merely point to Loper Bright to challenge a regulation previously upheld under Chevron.
Corporate counsel should expect an uptick in litigation as businesses and other entities challenge objectionable federal regulations. This could result in increased judicial oversight, potentially leading to inconsistent compliance obligations across different jurisdictions. Overall, businesses will likely face greater uncertainty regarding agency rulemaking and enforcement, further complicating the legal landscape for regulated entities.
In Corner Post, the Supreme Court ruled that the six-year statute of limitations under the APA begins when a plaintiff’s cause of action first accrues, not when the regulation becomes final. The case involved a company that began operations seven years after the enactment of a Federal Reserve regulation on interchange fees. Since the APA only permits persons injured by a final agency action to obtain judicial review, the Supreme Court reasoned that claims cannot accrue before the date of injury. This interpretation allows a business to now challenge established federal regulations, provided it can demonstrate a specific injury within six years of bringing the action.
Corner Post reshapes the landscape for regulatory challenges, potentially opening the door for more lawsuits against longstanding regulations. Regulated entities should prepare for the possibility of older regulations being contested and potentially overturned. Coupled with Loper Bright, this decision could lead to greater regulatory uncertainty. Therefore, corporate counsel should closely monitor these regulatory and judicial developments. Proactive engagement with agencies and participation in the rulemaking process may help mitigate these risks.
The Corner Post decision, however, could also provide potential opportunities for businesses. By allowing affected companies to challenge outdated or overly burdensome regulations, businesses can advocate for a more favorable regulatory environment that better aligns with current industry practices, economic realities, and innovation.
Jarkesy addressed the constitutional validity of the use of administrative proceedings to enforce security laws. The Supreme Court held that the use of administrative tribunals for antifraud enforcement actions violated the Seventh Amendment of the Constitution, which guarantees the right to a jury trial in suits at common law. More broadly, monetary sanctions that go beyond a purely remedial purpose and instead involve punitive measures implicate the Seventh Amendment, which necessitates adjudication by a court of law. This landmark decision will have far-reaching implications for the SEC and other regulatory agencies that rely on administrative proceedings to enforce compliance. Jarkesy suggests that enforcement proceedings that seek civil penalties do not fall within the public rights exception, which allows adjudication by non-Article III courts. Instead, such actions should be brought in federal court.
In addition, some agencies, like the Federal Energy Regulatory Commission, can only pursue civil penalties through administrative enforcement proceedings; these agencies will require new congressional authorization to pursue civil penalties in federal court. Corporate counsel should anticipate a slower pace of regulatory enforcement due to the federal court system’s resource constraints. Additionally, corporate counsel should leverage the right to a jury trial to challenge enforcement actions more vigorously. This shift may lead to a higher likelihood of settlements as both parties seek to avoid protracted litigation.
The Supreme Court’s decisions in Loper Bright, Corner Post, and Jarkesy represent a significant realignment in the regulatory landscape for businesses. Corporate counsel must navigate this new environment by staying informed of regulatory developments, reassessing compliance and litigation strategies, and proactively engaging with federal agencies. By doing so, businesses can better manage risks and leverage opportunities arising from these rulings.
With any change in administration, companies must reckon with shifting legal and policy landscapes. By press time, President Trump will have been inaugurated for his second term. Both on the campaign trail and during the months since the election, President Trump repeatedly promised to roll back environmental and energy regulations. These deregulatory efforts will bring new opportunities—and challenges—for corporate counsel mindful of both the short and long-term health and success of their companies.
While Trump’s deregulatory efforts are a certainty, their scope, timing, and long-term impact is less clear. Since Republicans control both houses of Congress and the presidency, initial deregulatory efforts will likely employ the Congressional Review Act (CRA) to adopt resolutions of disapproval to overturn agency rules promulgated at the end of Biden administration. Republicans successfully used this tool to repeal sixteen rulemakings issued by the Obama administration during Trump’s first term. Rules issued after approximately August 1, 2024, are within the lookback window for congressional review under the CRA. These rules include EPA’s final rule regarding reclassification of major sources as area sources under section 112 of the Clean Air Act (issued September 10, 2024) and the national primary drinking water regulations for lead and copper (issued October 30, 2024). The Department of Energy is also pushing to finalize regulations setting efficiency standards for various consumer and commercial equipment categories (e.g., commercial refrigerators, consumer water heaters), which could also be CRA targets.
Rules promulgated prior to the CRA lookback window will require a different de-regulatory strategy—namely, a new notice-and-comment rulemaking proceeding. It will be difficult to anticipate the timelines for these rule revisions, as they are likely to be squeezed between Trump’s competing interests in quick and decisive action and the agency staff reductions proposed during the Trump campaign. Corporate counsel will need to maintain relationships with remaining agency staff to keep abreast of regulatory developments and to communicate preferred regulatory changes through the public comment process as well as informal channels.
One likely target for such a regulatory rollback is the U.S. Securities and Exchange Commission’s (SEC) climate and ESG disclosures rule, which was promulgated in March 2024. Under this rule, businesses registered with the SEC must disclose the effects of climate-related risks (including severe weather events) on their business strategy, operations, and finances; some filers are also required to report on greenhouse gas emissions and other climate-related targets. The rule was scheduled to become effective in May 2024, with the first expanded reports submitted for some filers in 2025 (while the requirements would phase in for the remaining filers between 2026 and 2028). After numerous legal challenges, the SEC stayed implementation of the rule in April 2024, and President Trump’s election in November 2024—and his likely nomination of Paul Atkins to lead the SEC—means the rule will probably be rolled back via a new rulemaking process.
Climate disclosures will continue to pose a complex area for corporate counsel to navigate, however, since large corporations will remain subject to disclosure requirements from multiple jurisdictions. For example, California’s broadly applicable reporting standards require disclosure of greenhouse gas emissions (SB 253), climate-related financial risks (SB 261), and information related to “carbon neutral,” “net-zero emissions,” or similar claims (AB 1305). Several other states (e.g., New York) are considering similar disclosure legislation. Additionally, many foreign jurisdictions have their own comprehensive environmental reporting standards; the European Union’s Corporate Sustainability Reporting Directive (CSRD), which requires detailed reporting on sustainability factors, including climate change, water resources, pollution, and biodiversity, provides one example. Accordingly, corporate counsel—especially for multi-national corporations—will need to continue to monitor the global regulatory landscape to ensure compliance with the various disclosure standards.
The Trump administration likely will also usher in changes to the ways in which environmental laws are enforced. While the Trump administration is likely to maintain enforcement efforts for some programs (especially those touching on drinking water or hazardous waste cleanup), the administration may initiate fewer enforcement actions in other contexts—such as the oil and gas industry and domestic endangered species enforcement. As a result of these changes at the federal level, certain states (e.g., California) are likely to increase the number of enforcement actions initiated. Meanwhile, environmental non-profit organizations are actively raising funds, which will be used (at least in part) to support additional citizen suit actions against companies, potentially including those who report violations of their permit terms. Finally, due to the five-year statute of limitations for most environmental violations, companies that do not prioritize regulatory compliance will risk federal enforcement by a subsequent administration. Thus, corporate counsel should maintain robust internal compliance programs to protect long-term interests.
The Trump administration likely will also bring new opportunities for companies that are already subject to enforcement actions. The first Trump administration prioritized administrative settlements over more complex judicial consent decrees, and DOJ and EPA officials emphasized that enforcement efforts should be focused on achieving compliance rather than additional projects that reduce emissions or discharges beyond those required in a facility’s permit. Therefore, the government may be more willing to agree to favorable settlement terms than during Biden’s term. Similarly, in light of the new administration’s concerns about “cooperative federalism,” federal authorities are unlikely to pursue violations that have been resolved through a state enforcement action.
In summary, the Trump administration’s deregulatory agenda is likely to reduce environmental compliance obligations on companies, and the federal enforcement of environmental regulations will also become less common. Corporate counsel should stay vigilant, however, to ensure compliance with state or international requirements and to avoid being targeted by state or NGO enforcement. Indeed, with only four years to enact his agenda (and with many Democrats and NGOs committed to disrupting or delaying implementation of Trump’s environmental regulatory rollbacks), substantial questions remain regarding the scope and longevity of any regulatory changes.
