US Supreme Court to Consider Curbing Authority of Federal Regulatory Agencies

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MAY 1, 2023

The US Supreme Court in Washington, DC, US, on Wednesday, April 19, 2023. Democrats oppose the Republican-led Congressional Review Act resolution to disapprove of the Department of Veteran Affairs’ interim rule on reproductive health care.

The US Supreme Court will consider overturning a decades-old legal doctrine that has given federal regulators broad power to define their authority, accepting an appeal that aims to put new constraints on environmental, consumer-protection and financial-watchdog agencies.

The move sets up the nine-month term that starts in October as a potential blockbuster for the power of regulatory agencies. The court, which has already rolled back agency power in a series of cases, said previously it will consider whether the Consumer Financial Protection Bureau’s funding system is constitutional.

The appeal by four New Jersey fishing companies asks the court to overturn the watershed 1984 Chevron v. Natural Resources Defense Council ruling. That decision said courts should defer to administrative agencies when they offer a reasonable interpretation of an unclear statute.

Democratic administrations have relied heavily on the so-called Chevron doctrine, using it to justify mandates on energy, the environment and the workplace. The conservative-dominated Supreme Court has chipped away at Chevron in recent years, but until now had eschewed any direct challenge.

Overturning Chevron would put more onus on Congress to directly tackle policy issues — and give judges more authority to define the limit of agency powers. The high court’s ruling would affect regulations that have been on the books for decades in addition to future rules in such nascent areas as cryptocurrency and artificial intelligence. Supporters of broad agency power said the upshot could be a regulatory earthquake.

“Chevron has become the crucial bulwark to protect executive branch agencies from doing the job that Congress assigned them without improper interference from courts,” said James Goodwin, a senior policy analyst at the Center for Progressive Reform. “You’ve basically just pulled the rug out from under Congress for the last 40 years.”

Long-Targeted Ruling

Critics of big government have targeted the Chevron doctrine for years, much as antiabortion groups eyed the now-overturned Roe v. Wade ruling. Paul Clement, a Washington lawyer who represents the fishing companies, said in an emailed statement that the Chevron doctrine “has enabled the widespread expansion of unchecked executive authority.”

The practical impact will be tempered by recent Supreme Court decisions that have already slashed agency authority, including a 2022 ruling that requires regulators to have clear congressional authorization before acting on “major questions.”

In addition, federal courts have already shown a willingness to brush aside Chevron, said Josh Galperin, an assistant professor of law at Pace University. The Supreme Court hasn’t relied on the doctrine since 2016.

“Chevron has become less of a rule of law and more of a loose standard that the courts don’t feel obligated to adhere to,” Galperin said.

Even so, the impact could be sweeping. Cary Coglianese, director of the Penn Program on Regulation at the University of Pennsylvania’s law school, said a decision overruling Chevron could affect the ability of financial-regulatory agencies to address cryptocurrency and the impact of artificial intelligence.

“Any agency across the federal government could potentially find itself limited in the kind of flexibility it has to respond to new problems and new needs for agency action,” he said. “If you look at the financial regulatory agencies, a lot of them are still exercising authority from statutes that were adopted decades ago. Even the Dodd-Frank Act is now nearly a decade and a half old.”

Justice Ketanji Brown Jackson took no part in the court’s decision to accept the latest case, probably because she participated in it as a federal appeals court judge. As is customary, Jackson didn’t explain her recusal.

Herring Fishing

The case involves a federal requirement that some vessels fishing for herring off the Atlantic coast hire monitors for conservation and management purposes. The challengers say Congress didn’t authorize the National Marine Fisheries Service to require fishing companies to pay for the observers.

“In a country that values limited government and the separation of powers, such an extraordinary power should require the clearest of congressional grants,” the fishing companies argued. They say they could have to devote as much as 20% of their revenues toward paying monitors under the rule.

In upholding the monitor requirement on a 2-1 vote, a federal appeals court in Washington relied on the Chevron doctrine. The panel said the rule was based on a reasonable interpretation of the 1976 Magnuson-Stevens Act, which governs the management of marine fisheries in federal waters.

The Biden administration defended the Chevron doctrine, saying it “promotes political accountability, national uniformity, and predictability, and it respects the expertise agencies can bring to bear in administering complex statutory schemes.”

In urging the Supreme Court to reject the appeal, the administration said the fishery dispute has little practical importance, in part because the monitoring program is on hold for unrelated reasons. The government also says the four suing companies haven’t shown they ever had to pay for a monitor.

Narrower Path

The appeal offers the court a narrower path for backing the fishing companies without directly overturning Chevron. The fishing companies say the court alternatively could rule that, because the 1976 law doesn’t say anything about requiring the industry to pay for the cost of inspectors, Chevron doesn’t even apply.

“Silence is not ambiguity,” the companies argued.

The court took an unusually long time to decide how to handle the case, scheduling it for potential discussion at five private conferences before announcing the justices would hear one of two questions presented by the appeal. That question asks the court to either overrule or “clarify” Chevron.

“It appears they have given themselves latitude to either overturn or simply tighten the applicability of Chevron,” said Sally Katzen, a professor at New York University School of Law. “The latter is a strong possibility because the question presented is framed in terms of when is a statute ‘ambiguous.’”

The fishing companies’ appeal drew an unusual level of support, as outsiders filed 14 friend-of-the-court briefs urging the justices to take up the case.

The case is Loper Bright Enterprises v. Raimondo, 22-451.


Courtesy/Source: Bloomberg