US court's reversal of 'Chevron deference' may limit investments in EVs, safer chemicals, Jefferies says

Xylem

11/07/2024 14:26

July 11 (Reuters) - The U.S. Supreme Court's recent
decision to overturn a 1984 precedent, which allowed government
agencies to interpret unclear laws, could curb investments in
electric vehicles and the development of safer chemicals used in
manufacturing, according to a Jefferies analyst.
    The precedent, known commonly as the "Chevron deference",
arose from a ruling involving the oil company Chevron, that
called for judges to defer to federal agencies for reasonable
interpretations of ambiguous U.S. laws.
 
    WHY IT'S IMPORTANT 
    Since judges are now required to interpret statutes
independently, instead of deferring to agencies such as the
Environmental Protection Agency (EPA), trade groups and
businesses could bring in more litigation challenging agency
rules, said Jefferies analyst Saree Boroditsky, in a note to
clients.
    This could limit investments in the EV transition and
development of alternatives to PFAS or "forever chemicals" that
have been found in drinking water, air and myriad consumer goods
despite being toxic to human health, Boroditsky added. 
    Agencies could also stop issuing regulations that have a
more ambitious scope, the analyst added
     
    THE CONTEXT
    Regulations related to "forever chemicals" and the emission
standards for light- and heavy-duty vehicles already see
challenges from manufacturing groups on the grounds that the
respective agencies are exceeding their authority or that the
rules lack explicit Congressional authorization.
    The overturning of the precedent will only further
incentivize industry groups, said Boroditsky.
    
    WHICH COMPANIES COULD BE IMPACTED
    Boroditsky highlights that water technology company Xylem
Inc  XYL.N  could be negatively impacted if PFAS investments are
curbed.
    If the EV transition is slowed because of the ruling,
companies that manufacture electrical components such as TE
Connectivity  TEL.N , Amphenol Corp  APH.N , Sensata
Technologies Holding  ST.N  and Littelfuse, Inc  LFUS.O  could
be affected, said Boroditsky.

 (Reporting by Ananta Agarwal in Bengaluru; Editing by Vijay
Kishore)
 ((Ananta.agarwal@thomsonreuters.com;))