Alexa, can you give me a recap on the past month in geopolitics?
Sure, we have seen the UK elections in which Labour has returned to power after 14 years, new questions have been raised regarding the first past the post system, and the Rt Hon Jennie has been taking X by storm. We have seen the Iranian elections which were prompted by the death of President Raisi in a helicopter crash, leading to the election of a relatively moderate President Pezeshkian - though most of the power still lies with Iranian Supreme Leader Khamenei...
Alexa, two times speed, please.
French elections which transitioned from first-round right-wing dominance to a cohabitation parliament. Israel's presence in occupied Palestinian territories has been declared illegal by the ICJ. President Biden has a very poor debate performance against former President Trump…
Alexa, how much is there? Three times speed, please.
Biden calls Zelenskyy, Putin.
Biden calls Kamala Harris, Putin, also.
Hungary's Viktor Orban meets Putin.
India's Modi bear-hugs Putin.
Assassination attempt on Trump.
South African elections result in the ANC losing its 30-year majority.
The UK hosts the European Political Community Summit.
Trump picks JD Vance to be his VP nomination.
Hulk Hogan rips his shirt off at the Republican National Convention.
China hosts their Third Plenum.
Russia sentences a US journalist to 16 years in prison for espionage.
Biden drops out the Presidential race...
There is more but hopefully the above gives a clear picture of just how busy the past few weeks have been in terms of headline-grabbing news.
Given all this, it would be understandable if the overturning of the US law, the Chevron deference (doctrine), perhaps hasn't grabbed your attention. However, it may well be something that signals a monumental change in the very fabric of US law.
The doctrine stems from the eponymous company, Chevron, debating the Clean Air Act back in the 1980s. The Supreme Court in this case unanimously decided that lower court judges should defer to the executive branch (i.e. the federal departments) when laws passed by Congress are ambiguous. Effectively, judges evaluate this in two steps: first, is a statute ambiguous, and second, is the Federal interpretation reasonable? If both answers are yes, then the judges side with the executive branch.
As such, the ‘Chevron doctrine’ has since been a sort of backbone for administrative law in the USA.
It understandably had its lovers and its haters. One could argue it was a progressive piece of legislation that allowed technocrats and qualified experts to act quickly to developing situations by attaching their rules and regulations to an existing piece of passed Congress legislation and avoiding partisan, time-consuming fighting. On the other hand, it placed immense legalistic power in the hands of unelected federal civil service employees, arguably avoiding the intended time-consuming bureaucratic process, and, despite fear of sounding hyperbolic, circumnavigating democracy.
For the eagle-eyed reader, you might have noticed an important grammatical feature in the above paragraph - it's in the past tense. Why? Well, a couple of fishermen of course!
Ultimately, the Chevron doctrine was repealed by the Supreme Court on 28th June 2024.
How do we move forward from here?
First and foremost, the ruling does not apply to past agency regulations and actions, though these may now be more susceptible to their own individual overturning. And, whilst new rules can still continue to be implemented by federal agencies from now, they could all be far more easily stopped or stalled by judges before they are implemented or overturned. One could argue that the power of interpreting laws has shifted from unelected technocratic specialists to nominated judges.
Perhaps we shall see Congress begin writing more explicit laws with less ambiguity as to how they expect the federal agencies to implement them - but if we thought that Congress was time-consuming now then this would presumably be a whole new ball game, making the US an even more legal-dominated state.
Agencies may try to position themselves for favourable court review of their interpretations by garnering more detailed rationales and records of their decision-making so that their conclusions will be persuasive even without Chevron.
Congress might even legislate a standard for courts to use when reviewing agencies’ statutory interpretation in the absence of Chevron (as seen in the Dodd-Frank Wall Street reform).
The question remains, however, as to whether small governments will be able to keep the leader of the free world in check, or if the Wild West will make a return, especially should a new financial crisis surface. Only time will tell.
One thing though that we can be certain of, in the face of the Chevron repeal and all of the goings on in geopolitics, is that we at Ravenscroft will remain focused and maintain our long-term view. Our role in making the best investment decisions for our clients is our top priority and, unlike the Chevron doctrine, our process and rules-based approach isn't subject to change.
