Supreme Court Overturns Chevron Ruling: Biden Administration Warns Of 'Convulsive Shock'

The U.S. Supreme Court has overturned a 40-year-old decision that gave the executive branch the power to rule on laws passed by Congress that were unclear.

The decision, known as the Chevron doctrine, stems from a unanimous Supreme Court case involving the energy company in an argument over the Clean Air Act that upheld an action by the Environmental Protection Agency under then-President Ronald Reagan.

Since then, the Chevron decision has required judges to defer to agencies' reasonable interpretations of congressional statutes. Friday’s 6-3 ruling to overturn the doctrine allows judges to decide on laws that are considered ambiguous.

The 1984 ruling has long been in the crosshairs of conservatives and business groups who argue that it gives too much power to the executive branch, the Associated Press reported.

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The Biden administration has defended the law, warning that overturning it would be destabilizing and could bring a "convulsive shock" to the nation's legal system.

But groups representing the gun industry and other businesses such as tobacco, agriculture, timber and homebuilding have urged the Supreme Court to overturn the decades-old ruling.

The Supreme Court took a close look at the Chevron ruling in January when presiding over a case brought by herring fishermen who objected to being forced to pay for federal inspections of their catch, USA Today reported.

Price Action: Makers of guns, tobacco and timber saw their stocks having mixed reactions to the Supreme Court decision by midday Friday. Smith & Wesson Brands, Inc. (NASDAQ:SWBI) slipped 2.2% to $14.45, while Olin Corporation (NYSE:OLN) edged up 0.24% to $47.74.

Phillip Morris International Inc. (NYSE:PM) shed 0.33% to $101.23 and British American Tobacco p.l.c. (NYSE:BTI) jumped 0.24% to $30.97. International Paper Company (NYSE:IP) slid 0.08% to $43.22 by midday on Friday.

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