After hearing oral arguments earlier this month in two related cases about commercial fishing regulations, the U.S. Supreme Court is poised to tackle a landmark case that could impact every American: the fate of a precedent called Chevron deference.
This doctrine, established in a 1984 decision, compels courts to defer to federal agencies’ interpretations of ambiguous laws, essentially giving federal agencies leeway to fill in the gaps in U.S. law. The decision could curb the power of the administrative state and have wide ranging impacts on the energy sector, efficiency rules and yes, even philanthropy.
The Chevron doctrine grants broad power to the IRS and Treasury Department, both of which shape the rules and tax regulations that govern nonprofits.
In oral arguments before justices of the Supreme Court, Solicitor General Elizabeth Prelogar said overturning Chevron deference would lead to a torrent of lawsuits on past rulings. Prelogar noted that: “Thousands of judicial decisions sustaining an agency’s rulemaking or adjudication as reasonable would be open to challenge.”
Advocates of overturning Chevron argue it grants undue power to unelected bureaucrats, allowing them to craft policy through opaque regulations rather than the deliberative legislative process. In the context of nonprofits, this can translate into an ever-shifting regulatory landscape, rife with ambiguity and uncertainty. For nonprofits navigating a complex maze of IRS pronouncements and rulings, only to find the ground shift with the next interpretation, such unchecked administrative power stifles innovation and makes it difficult for nonprofits to focus on meeting their missions.
Of course, supporters of Chevron point to its role in promoting regulatory efficiency and expertise. They say agencies, immersed in the intricacies of their fields, are better equipped to interpret complex laws than are judges. For the IRS, this might translate to a more nuanced understanding of the unique challenges faced by different types of nonprofits.
However, this argument overlooks the inherent potential for regulatory overreach. Without robust judicial oversight, agencies can regulate beyond the scope of law or become susceptible to lobbying pressures, potentially skewing interpretations in favor of certain groups over others. In the world of nonprofits, this could mean regulations crafted to benefit certain organizations or punish those that fall into disfavor with the politicized bureaucracy in Washington D.C.
While both sides raise valid concerns, the current system arguably leans too heavily toward agency control, leaving many nonprofits struggling in a sea of ambiguity. Overturning Chevron could usher in a new era of transparency and accountability. The decision could force agencies to narrowly tailor regulations to align with the intent of the elected members of Congress.
For organizations fighting for a regulatory environment that empowers communities to thrive, this decision carries considerable weight.