US Supreme Court’s reversal of Chevron may be a double-edged sword for the ad industry

The 1984 ruling in the case Chevron v Natural Resources Defense Council case set a precedent for administrative law in the US by giving agencies the final say on interpreting the law’s gray areas – ultimately helping protect agencies in the face of lawsuits from industry groups. The reversal of the rule will put agencies under increased scrutiny and is likely to make many federal regulations – backed by both Republicans and Democrats – vulnerable to aggressive legal challenges.

Executive branch decisions and plans – such as restrictions on power plant pollution, healthcare coverage rules, net neutrality and a ban on noncompete clauses – will now be at greater risk of being struck down in courts.

The decision was made by what some have deemed ’the most pro-business Supreme Court ever’ in a 6-3 vote last week, with all three of the Court’s liberal justices opposing Chevron’s reversal. Overturning the doctrine has been a longstanding goal of conservatives.

In a 35-page majority opinion, chief justice John G Roberts Jr made the argument that Chevron had wrongly compelled courts to abandon their fundamental duty of interpreting the law in question to instead defer unquestioningly to bureaucrats.

The ruling marks a significant shift in the regulatory landscape at large. As Stuart Benjamin, a professor of law at Duke Law School, puts it: “By giving less deference to agency interpretations, it will make it less likely that a given agency decision will end up applying to those regulated. This will increase uncertainty because relying on agency regulations will become a riskier thing to do.”

But for businesses, including those in marketing, advertising and media, the ruling represents both potential opportunities and possible challenges ahead.

New hurdles to clear?

For adland, new levels of uncertainty in the regulatory landscape create an impetus for adaptability and caution.

“The regulatory environment will likely become more complex, requiring us to stay agile and responsive to new regulations and interpretations,” says Brian Town, CEO and founder of marketing agency Michigan Creative. “Ensuring compliance will be critical, and our strategies must be flexible to swiftly accommodate these changes.”

Town adds that his company, Michigan Creative, will “need to be exceptionally vigilant and adaptable.”

Brand-agency relationships and business models may become a critical focus area, too. As Alan Murdock, founder of marketing and media production company Murdock Media, points out: “Many companies have brought marketing and advertising more in-house and are creating less work through agencies.”

Now, the reversal of Chevron could create new incentive structures for brands, he suggests. “I suspect we will see [marketing] companies interested in challenging FTC decisions and policies use outside agencies to push the bounds of what’s allowed.”

Of course, marketing and media agencies may also be roped into cases brought against their clients, too, increasing the need for vigilance. “The changing structure will force marketing and advertising executives and agencies to stay ahead of the curve on controversial issues or court cases involving their business clients,” says Baruch Labunski, CEO at SEO marketing agency Rank Secure.

It’s plausible, he says, that forthcoming legal challenges to existing regulations might seek to hold advertising and marketing organizations accountable to some degree.

Labunski predicts that the industry will need to invest in more advocacy to protect itself in light of a more litigious climate. “Marketers and advertisers will take on more of a lobbying role as corporations pursue regulatory changes,” he says.

Or a route to empowerment?

Of course, not everyone sees Chevron’s repeal as a risk for advertisers and marketers.

For one, the decision might empower businesses – including marketing and media organizations – to challenge regulatory overreach more effectively. Ken Nahigian, co-founder of Washington, DC-based think tank the Balancing Act Project, sees this as a net positive: “It puts power back in the hands of regulated entities to challenge whether their regulators have the authority to make rules that impact them.”

“Prior to this decision,“ Nahigian goes on, “if a marketing or advertising company was negatively impacted by a new rule and the company believed that the agency that made the rule didn’t have the authority to do so, there was not a lot the company could do to challenge the rule in court because the agency was given the benefit of the doubt – or deference. 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.”

Nahigian’s organization, the Balancing Act Project, advocates ”for Congress to provide final approval for significant federal agency regulations that impact American industries and their consumers.”

Even Rank Secure’s Labunski, who acknowledges the potential risks adland could face in light of the new ruling, agrees that businesses are likely to benefit from the power to challenge agency decisions in court. The move, he says, “removes a lot of power from governmental agencies that regulate businesses ... It also gives businesses more clout in court to defend themselves against overreaching regulations as a judge can decide a case rather than dismiss it in deference to the agency issuing the regulation.”

Anticipating the lawsuits ahead

Of course, legal challenges brought against specific regulations may prove more or less beneficial to the advertising and marketing industry at large.

For example, the FTC’s decision to bar noncompete agreements in employment contracts is likely to face immediate legal challenges. A ruling on this regulation will have significant implications for adland, no matter which way the cards fall.

“If that is challenged in court and overturned, it could help agencies retain top talent, though that may be more impactful on the engineering and design … divisions of corporations and businesses,” says Murdock.

However, he adds: “If the FTC’s rejection of noncompetes is challenged in courts but upheld, it may significantly increase the amount of product and service competition, which will increase the opportunities for advertising and marketing, but make those efforts more challenging as creators vie for position.”

Murdock also foresees legal challenges coming for the use of AI in marketing and advertising and various consumer protection regulations – all of which could generate a ripple effect throughout the marketing and media ecosystems.

And in Murdock’s estimation, it won’t be long until we see responses to Chevron’s repeal in the form of, you guessed it, marketing. “Any time there is a change this big … organizations [are going to] respond to it. We are likely to see political and advocacy marketing messages around this specific decision with calls to create new legislation to fast-track federal agency recommendations into law.”