In July, the U.S. Supreme Court issued two decisions significantly limiting the authority of federal government agencies to issue regulations:
- In Loper Bright Enterprises v. Raimondi, the court overruled Chevron U.S.A. v. Natural Resources Defense Council, a 1984 decision that provided broad rulemaking authority to federal agencies. In the Loper Bright case, the court found that the National Marine Fisheries Services of the U.S. Department of Commerce exceeded its authority in its regulation of commercial fisheries. The Loper Bright decision overrules Chevron, which had required courts to defer to federal agencies’ reasonable interpretations of statutes (i.e., laws passed by Congress) in their development of regulations interpreting federal laws. Over the past 40 years, the Chevron deference has enabled federal agencies to establish a variety of environmental, safety, and labor regulations that are important to the missions and operations of many nonprofits. Under the Loper Bright decision, federal courts now use their “independent judgement” to determine whether these federal rules are permissible.
- In Corner Post v. Federal Reserve, the court ruled that the six year statute of limitations for challenging federal rules starts when a business, nonprofit, or individual experiences harm from the rule, not when the rule is implemented. This ruling could open the door to court challenges of longstanding federal environmental, health and safety, and labor rules.
Practically, the Loper Bright decision makes it harder for federal agencies to make significant substantive policy changes through the regulatory process. This increases the likelihood of success of court challenges to new regulations affecting nonprofits as employers, including the U.S. Department of Labor’s recent overtime rule, and to the new and improved OMB Uniform Guidance, which sets many of the rules for federal grants to nonprofits. It also could delay or prevent federal agencies like the U.S. Treasury Department and U.S. Department of Education from issuing final rules on policies affecting nonprofits, including new donor advised fund rules and expansion of federal student loan relief programs. And nonprofits that advocate on federal rules may now need to focus some of their advocacy on Congress (to be more explicit in the laws it passes) and/or court (to interpret federal rules in an appropriate way). The National Council of Nonprofits has a helpful new blog post highlighting these and other implications of the Loper Bright decision for charitable nonprofits.
The Loper Bright decision only affects federal regulations, not the state rulemaking process. However, a recent blog post from the UNC School of Government explains that many of the federal rules that could be challenged under Loper Bright are important to the work of state and local governments in North Carolina, many of which partner with nonprofits to provide services to communities.