Blog Post | 
May 2024

What might the end of Chevron deference mean for AI governance?

Charlie Bullock

In January of this year, the Supreme Court heard oral argument in two cases—Relentless, Inc. v. Department of Commerce and Loper Bright Enterprises, Inc. v. Raimondo—that will decide the fate of a longstanding legal doctrine known as “Chevron deference.” During the argument, Justice Elena Kagan spoke at some length about her concern that eliminating Chevron deference would impact the U.S. federal government’s ability to “capture the opportunities, but also meet the challenges” presented by advances in Artificial Intelligence (AI) technology.

Eliminating Chevron deference would dramatically impact the ability of federal agencies to regulate in a number of important areas, from health care to immigration to environmental protection. But Justice Kagan chose to focus on AI for a reason. In addition to being a hot topic in government at the moment—more than 80 items of AI-related legislation have been proposed in the current Session of the U.S. Congress—AI governance could prove to be an area where the end of Chevron deference will be particularly impactful.

The Supreme Court will issue a decision in Relentless and Loper Bright at some point before the end of June 2024. Most commentators expect the Court’s conservative majority to eliminate (or at least to significantly weaken) Chevron deference, notwithstanding the objections of Justice Kagan and the other two members of the Court’s liberal minority. But despite the potential significance of this change, relatively little has been written about what it means for the future of AI governance. Accordingly, this blog post offers a brief overview of what Chevron deference is and what its elimination might mean for AI governance efforts.

What is Chevron deference?

Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. is a 1984 Supreme Court case  in which the Court laid out a framework for evaluating agency regulations interpreting federal statutes (i.e., laws). Under Chevron, federal courts defer to agency interpretations when: (1) the relevant part of the statute being interpreted is genuinely ambiguous, and (2) the agency’s interpretation is reasonable. 

As an example of how this deference works in practice, consider the case National Electrical Manufacturers Association v. Department of Energy. There, a trade association of electronics manufacturers (NEMA) challenged a Department of Energy (DOE) regulation that imposed energy conservation standards on electric induction motors with power outputs between 0.25 and 3 horsepower. The DOE claimed that this regulation was authorized by a statute that empowered the DOE to create energy conservation standards for “small electric motors.” NEMA argued that motors with between 1 and 3 horsepower were too powerful to be “small electric motors” and that the DOE was therefore exceeding its statutory authority by attempting to regulate them. A federal court considered the language of the statute and concluded that the statute was ambiguous as to whether 1-3 horsepower motors could be “small electric motors.” The court also found that the DOE’s interpretation of the statute was reasonable. Therefore, the court deferred to the DOE’s interpretation under Chevron and the challenged regulation was upheld.

What effect would overturning Chevron have on AI governance efforts?

Consider the electric motor case discussed above. In a world without Chevron deference, the question considered by the court would have been “does the best interpretation of the statute allow DOE to regulate 1-3 horsepower motors?” rather than “is the DOE’s interpretation of this statute reasonable?” Under the new standard, lawsuits like NEMA’s would probably be more likely to succeed than they have been in recent decades under Chevron.

Eliminating Chevron would essentially take some amount of interpretive authority away from federal agencies and transfer it to federal courts. This would make it easier for litigants to successfully challenge agency actions, and could also have a chilling effect on agencies’ willingness to adopt potentially controversial interpretations. Simply put, no Chevron means fewer and less aggressive regulations. To libertarian-minded observers like Justice Neil Gorsuch, who has been strongly critical of the modern administrative state, this would be a welcome change—less regulation would mean smaller government, increased economic growth, and more individual freedom.1 Those who favor a laissez-faire approach to AI governance, therefore, should welcome the end of Chevron. Many commentators, however, have suggested that a robust federal regulatory response is necessary to safely develop advanced AI systems without creating unacceptable risks. Those who subscribe to this view would probably share Justice Kagan’s concern that degrading the federal government’s regulatory capacity will seriously impede AI governance efforts.

Furthermore, AI governance may be more susceptible to the potential negative effects of Chevron repeal than other areas of regulation. Under current law, the degree of deference accorded to agency interpretations “is particularly great where … the issues involve a high level of technical expertise in an area of rapidly changing technological and competitive circumstances.”2 This is because the regulation of emerging technologies is an area where two of the most important policy justifications for Chevron deference are at their most salient. Agencies, according to Chevron’s proponents, are (a) better than judges at marshaling deep subject matter expertise and hands-on experience, and (b) better than Congress at responding quickly and flexibly to changed circumstances. These considerations are particularly important for AI governance because AI is, in some ways, particularly poorly understood and unusually prone to manifesting unexpected capabilities and behaving in unexpected ways even in comparison to other emerging technologies.

Overturning Chevron would also make it more difficult for agencies to regulate AI under existing authorities by issuing new rules based on old statutes. The Federal Trade Commission, for example, does not necessarily need additional authorization to issue regulations intended to protect consumers from harms such as deceptive advertising using AI. It already has some authority to issue such regulations under § 5 of the FTC Act, which authorizes the FTC to issue regulations aimed at preventing “unfair or deceptive acts or practices in or affecting commerce.” But disputes will inevitably arise, as they often have in the past, over the exact meaning of statutory language like “unfair or deceptive acts or practices” and “in or affecting commerce.” This is especially likely to happen when old statutes (the “unfair or deceptive acts or practices” language in the FTC Act dates from 1938) are leveraged to regulate technologies that could not possibly have been foreseen when the statutes were drafted. Statutes that predate the technologies to which they are applied will necessarily be full of gaps and ambiguities, and in the past Chevron deference has allowed agencies to regulate more or less effectively by filling in those gaps. If Chevron is overturned, challenges to this kind of regulation will be more likely to succeed. For instance, the anticipated legal challenge to the Biden administration’s use of the Defense Production Act to authorize reporting requirements for AI labs developing dual-use foundation models might possibly be more likely to succeed if Chevron is overturned.3

If Chevron is overturned, agency interpretations will still be entitled to a weaker form of deference known as Skidmore deference, after the 1944 Supreme Court case Skidmore v. Swift & Co. Skidmore requires courts give respectful consideration to an agency’s interpretation, taking into account the agency’s expertise and knowledge of the policy context surrounding the statute. But Skidmore deference is not really deference at all; agency interpretations under Skidmore influence a court’s decision only to the extent that they are persuasive. In other words, replacing Chevron with Skidmore would require courts only to consider the agency’s interpretation along with other arguments and authorities raised by the parties to a lawsuit in the course of choosing the best interpretation of a statute. 

How can legislators respond to the elimination of Chevron?

Chevron deference was not originally created by Congress—rather, it was created by the Supreme Court in 1984. This means that Congress could probably4 codify Chevron into law, if the political will to do so existed. However, past attempts to codify Chevron have mostly failed, and the difficulty of enacting controversial new legislation in the current era of partisan gridlock makes codifying Chevron an unlikely prospect in the short term. 

However, codifying Chevron as a universal principle of judicial interpretation is not the only option. Congress can alternatively codify Chevron on a narrower basis, by including, in individual laws for which Chevron deference would be particularly useful,  provisions directing courts to defer to specified agencies’ reasonable interpretations of specified statutory provisions. This approach could address Justice Kagan’s concerns about the desirability of flexible rulemaking in highly technical and rapidly evolving regulatory areas while also making concessions to conservative concerns about the constitutional legitimacy of the modern administrative state. 

While codifying Chevron could be controversial, there are also some uncontroversial steps that legislators can take to shore up new legislation against post-Chevron legal challenges. Conservative and liberal jurists agree that statutes can legitimately confer discretion on agencies to choose between different available policy options. So, returning to the small electric motor example discussed above, a statute that explicitly granted the DOE broad discretion to define “small electric motor” in accordance with the DOE’s policy judgment about what motors should be regulated would effectively confer discretion. The same would be true for, e.g., a law authorizing the Department of Commerce to exercise discretion in defining the phrase “frontier model.”5 A reviewing court would then ask whether the challenged agency interpretation fell within the agency’s discretion, rather than asking whether the interpretation was the best interpretation possible.

Conclusion

If the Supreme Court eliminates Chevron deference in the coming months, that decision will have profound implications for the regulatory capacity of executive-branch agencies generally and for AI governance specifically. However, there are concrete steps that can be taken to mitigate the impact of Chevron repeal on AI governance policy.  Governance researchers and policymakers should not underestimate the potential significance of the end of Chevron and should take it into consideration while proposing legislative and regulatory strategies for AI governance.

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Charlie Bullock, What Might the End of Chevron Deference Mean for AI Governance? (Inst. for L. & A.I., 2024), https://www.law-ai.org/chevron-deference.

What might the end of Chevron deference mean for AI governance?
Charlie Bullock
What might the end of Chevron deference mean for AI governance?
Charlie Bullock