News
Companies gain advantage as Supreme Court rules to curb regulators’ power
The Supreme Court has struck down a 40-year-old legal doctrine that gives federal agencies leeway to interpret laws, a move that could reduce the power regulators have to intervene in many industries.
The ruling could strengthen the companies’ position while reducing the influence of dozens of agencies, from the Environmental Protection Agency to the Food and Drug Administration to the National Labor Relations Board.
It’s the second time this week that judges have overturned regulators’ influence.
In another decision Thursday — SEC v. Jarkesy — the high court stripped the Securities and Exchange Commission of its ability to impose fines for civil violations, while also depriving a defendant of a jury trial.
Friday’s ruling involved two cases in which commercial fishing companies argued that the National Marine Fisheries Service went too far in requiring companies to pay for onboard monitors to keep an eye on overfishing of herring off the New England coast.
Making companies foot the bill for monitors imposed by agencies is unfair, plaintiffs arguedbecause laws regulating the fishing industry do not specify whether the government or companies must pay.
The two cases—Relentless, Inc. v. Department of Commerce and Loper Bright Enterprises v. Raimondo — were decided by 6-3 and 6-2, respectively. Judge Ketanji Brown Jackson recused herself from the Loper Bright case.
Herring are unloaded from a fishing boat in Rockland, Maine. The Supreme Court cases decided Friday focused on a dispute over payment for the presence of regulators on herring fishing boats. (AP Photo/Robert F. Bukaty, File) (ASSOCIATED PRESS)
Both cases challenged a four-decade-old legal precedent that became known as “Chevron deference.”
That precedent, stemming from a 1984 case involving the oil giant Chevron, held that judges must defer to a U.S. agency’s “reasonable” interpretations of ambiguously written laws.
Getting rid of Chevron, a rule created by a 6-0 conservative majority, has become a major issue for conservatives.
Chief Justice John Roberts, writing for the majority, said the 1984 decision was misguided “because agencies do not have special jurisdiction to resolve legal ambiguities.” Courts, on the other hand, he wrote, are well suited to resolve such questions.
John Roberts, Jr., Chief Justice of the United States. (Bill Clark/CQ-Roll Call, Inc via Getty Images) (Bill Clark via Getty Images)
The decision also calmed divided views on the role of federal lawmakers. Chevron’s critics characterized the doctrine as a power grab for the executive branch that gave unelected agency officials too much authority.
One of the fisheries lawyers argued that Chevron had been giving Congress cover for too long, allowing lawmakers to avoid the hard work of crafting effective legislation.
He argued that sectors like technology, student loans and cryptocurrencies still lack much-needed legislation.
The story continues
“They’re not addressed because Chevron makes it too easy for Congress to ignore them,” argued Loper’s attorney, Paul Clement, a former Bush administration lawyer.
In a dissenting opinion Friday, Justice Elena Kagan criticized the majority for overturning the agency’s authority through multiple rulings this term.
Kagan said the majority disregarded Chevron’s precedence “for no particular reason.” Chevron, Kagan added, is “yet another example of the Court’s decision to roll back the agency’s authority despite congressional guidance to the contrary.”
Given Chevron’s reach, Kagan added that the new ruling “is likely to produce large-scale disruption.”
Jules Levenson, an employment lawyer for Seyfarth, said the Loper and Jarkesy decisions may not end the high court’s erosion of federal agencies’ power.
But Friday’s decision in Loper, he said, left some room for courts to defer to an agency’s statutory interpretation, particularly when Congress directly authorized an agency to do so.
And in the Jarkesy case, he explained, the court failed to resolve a question that could impact multiple administrative agencies — whether the SEC’s authority to function as investigator, prosecutor and adjudicator violates the Due Process Clause of the Fifth Amendment.
“These issues will almost certainly be revisited by SCOTUS in future terms,” Levenson said.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
Read the latest financial and business news from Yahoo Finance