The Supreme Court’s overturning of the Chevron Deference precedent empowers the judiciary over executive agencies, creating new challenges and opportunities for the advertising industry’s regulation efforts.
No matter where you stand on the political spectrum, it’s hard not to watch the Supreme Court since it established its conservative majority. When SCOTUS overturned Roe v. Wade — there was major backlash from some and celebratory cheers from others — the country knew we were at a major political turning point.
Now, the dominoes just keep on falling. With the 1984 Chevron Deference precedent overturning, power has shifted away from the executive branch to the judiciary, potentially transforming federal government operations.
Consequently, the court’s conservative majority has made many regulations vulnerable to legal challenges. This ruling affects executive actions, including plans to install Wi-Fi on school buses, ban non-compete clauses, implement health care coverage rules under Obamacare, and forgive student loan debt. Plus, the advertising industry will have its blowbacks.
As no industry remains untouched by this, what does it mean for the advertising industry? The consensus is that it will infringe on regulatory efforts and cause publishers and advertisers to challenge government agency regulations that affect their businesses more fervently.
A Look Into Chevron
Chevron deference was a legal principle established by the Supreme Court in the 1984 case Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. It required courts to follow administrative agencies’ interpretations of unclear laws, as long as those interpretations were reasonable and Congress had not explicitly resolved the issue.”
For 40 years, Chevron deference played a crucial role in administrative law. However, in June 2024, the Supreme Court overturned this doctrine in Loper Bright Enterprises v. Raimondo. The Court ruled that the Administrative Procedure Act requires courts to independently judge whether an agency has acted within its statutory authority without deferring to the agency’s interpretation of ambiguous laws.
Previously, Chevron deference allowed agencies to interpret statutes they administered as long as their interpretations were rational and not explicitly contradicted by Congress. This deference did not extend to agencies interpreting their own jurisdiction or statutes they did not administer.
The overturning of Chevron deference in 2024 reduced the power of administrative agencies and increased the judiciary’s role in interpreting laws. This change will likely impact various sectors, including advertising, by altering how regulatory guidelines are enforced and interpreted.
Chevron Looms Over Advertising
These regulatory changes will compel the advertising industry to become more adaptable and cautious. As regulations, particularly the ones related to privacy, become increasingly complex, companies must remain agile in their compliance efforts. Publishers and advertisers must be flexible and quickly adjust to new rules and interpretations.
The reversal of Chevron could further incentivize brands to challenge FTC decisions through outside agencies, potentially altering incentive structures within the industry. On the other hand, federal agencies may now adopt slower, more cautious rulemaking, and Congress may need to draft clearer legislation related to privacy.
But not everyone sees this as a negative. Ken Nahigian, co-founder of the Balancing Act Project, sees potential benefits for the advertising industry following Chevron’s repeal. Publishers and advertisers may now be able to challenge industry regulations they believe negatively affect them, a feat Nahigian believed impossible before the repeal.
“After today, the company will be able to challenge the rule and the courts will decide whether the agency had or didn’t have the authority. This will lead to a more thoughtful and collaborative process for regulating the industries,” said Nahgian.
The Impact On Ad Tech’s Privacy Detox
Publishers and advertisers will still face heightened legal scrutiny. Legal challenges to regulations, such as the FTC’s privacy crusade, will have substantial implications for the industry. Additionally, challenges related to using AI in marketing and various consumer protection regulations could generate ripple effects throughout advertising and digital media.
With increased inspection of privacy compliance in ad tech, the Chevron appeal could add to the already stressful privacy detox ad tech is experiencing right now. Especially with the uphill battle of creating a Federal Privacy Law in the U.S.
Major privacy-related efforts that may be impacted include the FTC’s Commercial Surveillance and Data Security Rulemaking, updates to the Children’s Online Privacy Protection Act (COPPA), and inter-agency efforts to prevent discriminatory automated systems in housing and employment.
This will require publishers and advertisers to stay ahead of regulatory developments and adapt their strategies accordingly. But this industry is no stranger to adapting to new regulations at a fast pace. It’s the name of the game.