Supreme Court signals openness to curtailing federal regulatory power in potentially major shift

Washington — The Supreme Court's conservative majority appeared likely Wednesday to curtail the ability of federal agencies to regulate a host of areas that touch on American life, signaling that a 40-year-old decision characterized as a "bedrock" of administrative law could be in jeopardy.

The two challenges before the justices Wednesday arose from a 2020 federal regulation requiring owners of fishing vessels in the Atlantic herring fishery to pay for monitors who collect data and oversee operations while they're at sea.

But herring and the rule that gave way to the disputes were seldom mentioned during oral arguments. Instead, the justices focused on the 40-year-old legal doctrine underpinning the fight known as "Chevron deference," which requires courts to defer to an agency's interpretation of laws passed by Congress if it is "reasonable."

Critics of the framework argue it gives federal bureaucrats too much power in crafting regulations that affect major swaths of everyday life, and overturning Chevron has long been a goal of the conservative legal movement. 

The Supreme Court arguments

The court's conservative majority seemed open to doing just that in several hours of arguments, with justices noting that the Supreme Court itself hasn't applied Chevron deference since 2016, and observing that an agency's interpretation of a statute is subject to the policy preferences of the party in power.

"The reality of how this works is Chevron itself ushers in shocks to the system every four or eight years when a new administration comes in, and, whether it's communications law or securities law or competition law or environmental law, it goes from pillar to post," Justice Brett Kavanaugh said.

Justice Neil Gorsuch, who seemed the most skeptical about leaving the framework in place and has suggested in the past that the court do away with it, said it is a "recipe for anti-reliance," and noted that lower court judges have called for the Supreme Court to overrule Chevron.

"Even in a case involving herring fishermen and the question of whether they have to pay for government officials to be on board their boats — which may call for some expertise but it doesn't have much to do with fishing or fisheries, it has to do with payments of government costs — lower court judges even here in this rather prosaic case can't figure out what Chevron means," Gorsuch told Solicitor General Elizabeth Prelogar, who argued on behalf of the federal government.

Chief Justice John Roberts noted that it has been several years since the Supreme Court invoked Chevron and wondered whether it has "overruled it in practice, even if we've had to leave the lower courts to continue to grapple with it?" 

The regulation

The rule at the center of the two disputes before the justices was enacted by the National Marine Fisheries Service under the Trump administration. Though commercial fishing vessels have taken federal observers on trips for decades, the regulation required them to foot the bill for the at-sea monitoring, which can cost more than $700 per day and eat into profits.

The agency implemented the rule under a 1976 law, arguing the measure allows it to require fishermen to cover the cost of the monitors. But companies that operate vessels in New Jersey and Rhode Island challenged the regulation in two different federal courts, arguing the National Marine Fisheries Service did not have the authority to mandate the industry-funded monitoring. 

A federal district court in Rhode Island ruled for the federal government, concluding in September 2021 that under the first step of the Chevron analysis, the federal law underlying the new monitoring rule was ambiguous. He then concluded that the National Marine Fisheries Service's decision to require fishermen to pay for the observers was allowed.

The U.S. Court of Appeals for the 1st Circuit upheld the lower court's decision, determining that the 2020 rule was a "permissible exercise of the agency's authority" under Chevron and was lawful.

In Washington, D.C., where the four commercial companies from New Jersey brought their challenge to the monitoring rule, the district court concluded that the 1976 law unambiguously authorizes the industry-funded monitoring.

A divided three-judge panel on the U.S. Court of Appeals for the District of Columbia Circuit determined that the statute is not "wholly unambiguous" on whether the government can require vessels to pay for at-sea monitoring, and proceeded to step two of the Chevron framework. It then determined that the fisheries service's interpretation of the law is a "reasonable" way of addressing the "silence on the issue of cost of at-sea monitoring" and deferred to the agency.

Justice Ketanji Brown Jackson recused herself from the case involving the New Jersey fishermen, known as Loper Bright Enterprises v. Raimondo, since she was on the three-judge panel on the D.C. Circuit that heard arguments. She participated in oral arguments Wednesday in the Rhode Island case, known as Relentless v. Department of Commerce. Jackson raised concerns that ending Chevron deference would give the courts too much power and lead judges to engage in policy-making.

"When does the court decide that this is not my call?" she asked, later telling Roman Martinez, who argued on behalf of the Rhode Island fishermen, that she is "worried about the courts becoming uber-legislators."

Justice Elena Kagan suggested that federal agencies are in some circumstances better positioned to decide how to fill the gaps in the laws passed by Congress when implementing them.

"Judges should know what they don't know," she said.

Kagan peppered Martinez with questions about whether a court or federal agency is in the better place to fill gaps in statutes on matters like drug classification, environmental standards or artificial intelligence.

"Congress knows that there are going to be things that it writes that are just not going to be clear — how this will apply or what it will mean with respect to countless factual situations that this country will have to address. Does the Congress want this court to decide those questions, policy-laden questions of artificial intelligence?" she asked.

Kagan continued: "The issue we're deciding here is … more like the countless policy issues that are going to confront this country in the years and decades ahead. Will courts be able to decide these issues as to things they know nothing about? Courts that are completely disconnected from the policy process, from the political process and that just don't have any expertise and experience in an area or are people in agencies going to do that? That's what this case is about."

Chevron deference

The concept of Chevron deference stemmed from the Supreme Court's 1984 landmark decision in the case Chevron v. National Resources Defense Council, which involved a regulation promulgated by the Environmental Protection Agency under the Clear Air Act.

Since then, the doctrine has been applied by lower courts in thousands of cases. The Supreme Court has invoked it to uphold agencies' interpretations of statutes at least 70 times, though not since 2016.

Prelogar, the solicitor general, argued that Chevron is a "bedrock principle" of administrative law that Congress, federal agencies, states and regulated entities have come to rely on as a "background rule." She also told the justices that it gives weight to the expertise of those working in the government.

But critics of Chevron have said that the doctrine puts the thumb on the scale for the government when individuals mount challenges to regulations in federal court.

"Chevron has this disparate impact on different classes of persons," Gorsuch told Prelogar. 

Citing his experience as a federal appeals court judge, he said Chevron rarely benefits immigrants, veterans seeking benefits or people applying for disability benefits who lack the power to influence agencies during the rule-making process and turn to the courts to challenge regulations.

"In every one of those, Chevron is exploited against the individual and in favor of the government," Gorsuch said.

A decision from the court is expected by the summer.