(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 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, Amphenol Corp, Sensata Technologies Holding and Littelfuse, Inc could be affected, said Boroditsky.

(Reporting by Ananta Agarwal in Bengaluru; Editing by Vijay Kishore)