A forty-year-old legal theory that grants federal agencies discretion in interpreting legislation was overturned by the Supreme Court; this decision may limit the authority regulators have to get involved in numerous businesses.
Businesses may benefit from the judgment while numerous agencies, including the National Labor Relations Board, the Food and Drug Administration, and the Environmental Protection Agency, may lose some of their influence.
This is the second time this week that judges have reduced the power of regulators.
In a different ruling on Thursday, the Supreme Court denied a defendant a jury trial and denied the Securities and Exchange Commission the authority to fine people for civil infractions. The case is SEC v. Jarkesy.
In two of the instances considered in Friday’s verdict, commercial fishing companies contended that the National Marine Fisheries Service overreached itself in asking them to pay for onboard monitors to keep an eye out for overfishing of herring off the coast of New England.
The plaintiffs contended that it is unjust to require enterprises to pay for agency-imposed monitors as legislation governing the fishing sector is ambiguous about who should bear the cost—the government or the companies themselves.
The decisions in the two instances, Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce, were 6-3 and 6-2, respectively. In the Loper Bright case, Justice Ketanji Brown Jackson withdrew her participation.
Two court decisions called into question a forty-year-old legal standard known as “Chevron deference.”
This precedent, which dates back to a 1984 case involving the massive oil company Chevron, said that judges had to accept the “reasonable” interpretations of vaguely worded legislation made by a US government.
The repeal of the Chevron rule, which was established by a conservative 6-0 majority, has grown in significance for conservatives.
In his majority opinion, Chief Justice John Roberts stated that the 1984 decision was incorrect “because agencies have no special competence in resolving statutory ambiguities.” He wrote, however, that courts are best placed to resolve these kinds of issues.
Divided opinions about the function of federal legislators were also resolved by the ruling. The philosophy was criticized by Chevron for giving non-elected agency personnel excessive power and for being an attempt by the executive branch to seize power.
A fisheries lawyer contended that Chevron had been shielding Congress for far too long, allowing legislators to evade the difficult task of crafting meaningful laws.
He contended that industries ranging from technology to student loans to cryptocurrency still require critical regulations.
“Chevron makes it so easy for Congress to ignore them,” said Paul Clement, a former Bush administration solicitor and attorney for Loper, “which is why they don’t get addressed.”
Justice Elena Kagan chastised the majority on Friday in a dissenting opinion, accusing them of repeatedly subverting agency authority this term.
The majority, according to Kagan, ignored Chevron precedent for “no special reasons.” Chevron, according to Kagan, is “yet another example of the Court’s resolve to roll back agency authority, despite congressional direction to the contrary.”
Kagan continued, “The new decision is likely to produce large-scale disruption given Chevron’s pervasiveness.”
According to Seyfarth’s labor and employment lawyer Jules Levenson, the Loper and Jarkesy rulings might not be the last in the high court’s history of undermining federal agency authority.
However, he noted that the Loper decision on Friday does give courts some leeway to accept an agency’s legislative interpretation, especially in cases when Congress has expressly given an agency permission to do so.
Furthermore, he clarified, the court in the Jarkesy case did not resolve a matter that might have an effect on several administrative agencies: whether the SEC’s jurisdiction to operate as a prosecutor, judge, and investigator is in violation of the due process section of the Fifth Amendment.
“These questions will almost certainly be revisited by SCOTUS in the next few terms,” Levenson stated.