Good morning. The Supreme Court appeared ready to overturn a 1984 case that business groups and conservative activists argue has handed too much power to unelected executive-branch bureaucrats—a ruling Reagan-era conservatives originally hailed as a curb on overweening liberal judges.

Justice Neil Gorsuch led the charge during oral arguments Wednesday to overrule the precedent, Chevron USA v. Natural Resources Defense Council, which he said has given agencies license to run roughshod over the rights of individuals and others caught in the federal bureaucracy without adequate recourse to the courts. By letting agencies construe laws “when Congress didn’t think about the problem, the government always wins,” he said.

• The 1984 case: The Chevron precedent directs federal judges to defer to an agency’s interpretation of federal law when its language is ambiguous, rather than having courts substitute their own interpretation of statutes like the Endangered Species Act or the Clean Water Act. As a practical matter, it means that a regulation, unless it is an unreasonable reading of the statutory language, should be upheld.
   
• The two cases argued separately Wednesday: They involve a federal program to protect Atlantic herring stocks, but the implications of overturning Chevron go well beyond fisheries, potentially limiting federal agencies’ ability to issue a range of environmental, consumer and workplace regulations.
   
• A remarkable about-face: In the 1984 Chevron case, the Supreme Court reasoned that executive-branch agencies are better positioned than federal judges to apply the statutes they were assigned to implement—and if an agency’s regulations are out of line, it can be held accountable through the elected president, its ultimate boss. Conservatives argue that over decades of congressional gridlock, Chevron deference—as the doctrine is known—has given federal agencies an end run around the lawmaking process.

U.S. likely to levy higher penalties for export-control violations.

A top U.S. official said businesses should expect much higher penalties for violations of export controls, the use of which has expanded as the U.S. seeks to curb the ability of Russia and China to obtain certain technology.

U.S. penalties for export-control violations could begin to approach the size of those meted out for foreign bribery, Matthew Axelrod, the Commerce Department’s assistant secretary for export enforcement, said Tuesday evening at an event at New York University School of Law.

“I think we’re on the cusp of that,” Axelrod said. “You can expect to see more big-ticket corporate resolutions going forward.”

New York financial regulator proposes guidance on insurers’ use of AI.

The New York State Department of Financial Services on Wednesday proposed guidance that aims to prevent unlawful discrimination in the use of artificial intelligence systems by insurers.

AI systems can help insurers and consumers by simplifying and expediting underwriting and pricing processes, said the regulator, but it cautioned that the data and sources for these systems may reflect systemic biases. NYDFS added that the self-learning aspect of AI systems, in which the systems acquire new knowledge on their own over time, increases the risk of inaccurate and unfairly discriminatory outcomes that can affect vulnerable communities.

“Technological advances that allow for greater efficiency in underwriting and pricing should never come at the expense of consumer protection,” Superintendent Adrienne Harris said in a statement Wednesday.

Read more on the guidance here.

—Mengqi Sun

OFAC sanctions former Guatemalan official over alleged bribery.

The U.S. Treasury Department has sanctioned a former Guatemalan energy and mining minister for his alleged role in bribery schemes in the country.

Alberto Pimentel Mata is accused by the U.S. Treasury’s Office of Foreign Assets Control of accepting monthly payments to help a private company obtain the permits and licenses it needed to operate in the energy and mining space in Guatemala. He also reportedly requested bribes of more than $1 million from Guatemalan mining industry groups to obtain mining licenses, the Treasury said. Pimentel also reportedly retaliated against Guatemalan energy and mining companies that wouldn’t offer to pay him bribes, the Treasury said.

The sanctions block any assets Pimentel has within U.S. jurisdiction, and prohibit U.S. companies and individuals from business dealings with him. The U.S. State Department in October banned his entry into the U.S., along with two other former Guatemalan officials, citing allegations of involvement in corruption.

Attempts to contact Pimentel for comment were unsuccessful, and the Guatemalan Ministry for Energy and Mines didn't immediately respond to a request for comment.

—David Smagalla

• The chief executive of Future FinTech Group, Shanchun Huang, denied allegations from the U.S. Securities and Exchange Commission that he artificially inflated the company’s share price before taking over as CEO.
   
• A federal judge on Wednesday questioned whether allowing the Securities and Exchange Commission to impose its regulations on Coinbase would give the agency sway over markets it doesn’t have authority to supervise.
   
• The world’s largest sovereign-wealth fund, Norges Bank Investment Management, is going after the now-defunct Silicon Valley Bank, its management and the Wall Street advisers that aided its rise. A legal filing on Tuesday accused SVB and its executives of concealing the lender’s ailing health from public view, while also ignoring warnings about risks from rising interest rates.
   
• Apple lost its effort to delay the implementation of a U.S. import ban of its smartwatches while the company appeals a federal trade ruling.

War, politics eclipse economics on Davos leaders’ minds.

Never mind interest rates, inflation or recession. The economic concerns that usually preoccupy the global elite at their annual gathering in Davos are taking a back seat to hot war in Ukraine and the Middle East, cold war between the West and China and watershed elections from India to the U.S.

For government and business leaders, it is a disorienting departure from a world in which fortunes were mainly driven by financial forces. The World Economic Forum, which hosts the meeting, is now the de facto world geopolitical forum.

“There’s a higher-level issue than the economy, which is geopolitics,” said Christian Mumenthaler, chief executive of reinsurance giant Swiss Re, which insures risks around the world. Geopolitics hasn’t been so big an economic threat since the height of the first Cold War in the 1980s, he said.

• Births in China dropped by more than 500,000 last year to just over 9 million in total, accelerating the decline in the country’s population as women shrugged off the government’s exhortations to reproduce.
   
• It’s becoming clearer that China’s stimulus policies for its beleaguered property sector aren’t enough to lift its fortunes early this year, with disappointing monthly sales data the latest sign that a recovery is some time away.
   
• Taiwan’s new leader says he’ll stick to the status quo—but his past makes the U.S. nervous. 
   
• Boris Nadezhdin appears to have taken some extraordinary risks in his quest to challenge Vladimir Putin in March’s presidential election.
   
• Israel withdrew thousands of troops from Gaza following pressure from the U.S. to transition to a more surgical phase of its war against Hamas, a move that has sparked concerns among some Israeli officials that the pullout could leave the country vulnerable to another surge in militant activity.
   
• The U.S. military said it struck Houthi weaponry in Yemen that threatened merchant and U.S. Navy vessels in the Red Sea overnight, America’s fourth strike on Houthi-held territory in recent weeks as security analysts warn that rising tensions across the region threaten to pull more parties into a widening war.
   
• In recent weeks, Russian forces have fired short-range ballistic missiles in Ukraine provided by North Korea, according to assessments from Washington, Seoul and Kyiv. Pyongyang has provided Moscow with dozens of the weapons, the U.S. says.
   
• Pakistan carried out airstrikes early Thursday inside Iranian territory, in retaliation for an Iranian airstrike in Pakistan on Tuesday that had targeted Iranian insurgents, Pakistani officials said.

• Executives atop Harvard University’s $51 billion endowment made an unusual tour of Silicon Valley last week to try to smooth relationships with top venture-capital investors. Some have been upset at the university’s response to the Oct. 7 attacks on Israel.
   
• A Boeing 737 MAX 9 plug door that blew out during a harrowing Alaska Airlines flight earlier this month was manufactured in Malaysia, according to the nation’s top air-safety investigator, who offered new details from the probe into what led to the accident.
   
• Apple’s new App Store payment policies are stirring outrage among software developers who say the iPhone maker is skirting the intention of a court ruling.
   
• BP appointed Murray Auchincloss as chief executive, turning to a company veteran to continue the oil giant’s shift toward renewable energy.
   
• The U.S. is getting better at treating cancer. We’re falling behind on preventing it.

Follow us on X at @WSJRisk. Follow Risk & Compliance editor David Smagalla @DSmagalla_DJ and reporters Mengqi Sun @_MengqiSun, Dylan Tokar @dgtokar and Richard Vanderford @VanderfordRich.

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